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Norwegian peace broker Erik Solheim said the talks hit a dead end and collapsed because neither side was willing to compromise on the Tamil Tiger demand to open a key highway to the northern peninsula of Jaffna.
Asked if he was disappointed over the outcome of the latest meeting, the first for Sri lanka's warring parties in eight months, he said, "I don't want to comment on that."
A visibly upset Solheim said he hoped the two sides will not revert to full-scale war and would honour pledges to uphold a threadbare truce.
However, he noted that similar pledges after the previous round of swiss talks in February were not honoured by both sides leading to an escalation of violence in Sri Lanka.
Diplomats expressed fears that the rebel Liberation Tigers of Tamil Eelam could resort to more guerrilla attacks in the coming weeks as the peace process ground to a halt.
The Sri Lankan delegation had hoped to get fresh dates for more talks on November 16 or 27, but the Tigers made it clear that they will not attend future talks unless the government opens the main highway to Jaffna.
The road remains closed since August 11 after the Tigers launched an attack at the military checkpoint at the entrance to the government-held part of Jaffna.