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Cardiff - Welsh regional rugby side the Scarlets said on Wednesday that any planned merger with rivals the Ospreys was "off the table", with the sport in turmoil over so-called "Project Reset".
The teams were expected to join forces under that plan, together with a new professional team being formed in north Wales, in the biggest domestic shake-up since the inception of regional sides 16 years ago.
Scores of Welsh professional players' immediate futures are in limbo, with Wales's Professional Rugby Board (PRB) hoping to have thrashed out a proposal for the Welsh Rugby Union (WRU) board.
But Ospreys chairman Mike James resigned at the start of Tuesday's PRB meeting, citing the WRU's "catastrophic mismanagement" of efforts to overhaul the game.
The furious Ospreys then released a strongly worded statement denying they were on the verge of merging with the west Wales side.
The PRB comprises representatives from the WRU and existing regions the Scarlets, Ospreys, Dragons and Cardiff Blues.
The chairman of the other three regions and senior WRU officials put their names to a statement that said a "central component" of the restructuring proposal was a merger between the Scarlets and Ospreys.
In a statement on Wednesday, Scarlets said they received a "high-level" approach from the Ospreys in December to explore the option of a merger.
"We were approached again last week by the Ospreys to reconsider a merger," it said.
"Heads of terms were agreed and signed by the Ospreys and Scarlets on March 1 on terms we believe our supporters would be happy with.
"This was to be proposed at a meeting of the PRB on Tuesday afternoon, but we were told at the start of that meeting that the Ospreys had changed their mind.
"The merger is off the table."
The upheaval comes as Wales chase a first Six Nations title for six years -- victory in their final two games against Scotland and Ireland would also secure a Grand Slam.
Wales head coach Warren Gatland said on Tuesday that the players had been distracted.
"We are trying to limit that distraction, which is why we had the meeting yesterday (Monday) to try and inform the players about what was going on so we could put it behind us and really focus on an important game for us," he said.
"There is no doubt it has been a challenge for the players."
