The British Government says that if there is no deal in Brussels there will be no further chance of meeting the deadline for agreement next Monday.
Proposals for improving the rights of pregnant workers would then be set back by two or three years, Whitehall officials believe. Under community rules the proposals would have to go back to square one and restart the tortuous European legislative process.
Attempts by Gillian Shephard, Secretary of State for Employment, who was presiding over yesterday's meeting, to persuade the Italians to agree a compromise failed to bear fruit.
British officials however, said the Italians, who were effectively vetoing the pregnancy directive, promised to consider Mrs Shephard's proposals. One of the Italian's objections was that the directive would equate maternity pay with sickness benefits.
Mrs Shephard agreed to clarify the fact that the council of ministers was not 'equating pregnancy and sickness'. She also said the council would undertake to review the directive in five years' time.
The Italian Government, along with the European Parliament and Commission, wants to see maternity pay set at 80 per cent of the woman's average earnings rather than the level of sick pay. Italian women currently receive 100 per cent of their normal pay when pregnant.
After helping to defeat more generous proposals, British ministers are backing a plan to abolish the present two-year qualifying period and introduce a system in which women would receive 14 weeks' wages at a minimum of statutory sick pay. Two weeks' leave would be compulsory.
Female workers would be entitled to the benefits immediately they started work rather than after the present two years, when British women are entitled to six weeks on 90 per cent of full pay and a further 12 weeks on maternity benefit of pounds 46.30.
Italy wants 16 weeks' maternity pay of at least 80 per cent of the woman's average earnings.
One possible compromise today is that countries would only apply the directive if their maternity benefits were inferior. This would let the Italians retain their 100 per cent system.