Talks on forming a new three-party government in Austria collapsed Friday as the smallest of the prospective coalition partners pulled the plug on the negotiations.

The talks had dragged on since Austria's president tasked conservative Chancellor Karl Nehammer in October with putting together a new government. That decision came after all other parties refused to work with the leader of the far-right Freedom Party, which in September won a national election for the first time.

Nehammer has been trying to assemble a coalition of his Austrian People's Party with the center-left Social Democrats and the liberal Neos party.

Nehammer's party and the Social Democrats have governed Austria together in the past but have the barest possible majority in the parliament elected in September, with a combined 92 of the 183 seats. That was widely considered too small a cushion, and the two parties sought to bring in Neos.

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But Neos leader Beate Meinl-Reisinger said she informed Nehammer, Social Democratic leader Andreas Babler and President Alexander Van der Bellen early Friday that her party “won't continue” talks on becoming a partner in a new government.

She pointed to the implications of a “budget hole” left by the last government as a major source of difficulty, adding that the election showed a desire for change but the talks appeared to be going backward rather than forward in recent days.

“There was a repeated ‘no’ to fundamental reforms this week,” Meinl-Reisinger told reporters in Vienna.

Austrian People’s Party general secretary Christian Stocker blamed “backward-looking forces” among the Social Democrats for prompting the collapse of the talks.

It wasn't immediately clear how the situation could be resolved. The two bigger parties could potentially try to form a government alone or turn to the environmentalist Greens as a prospective third partner.

Nehammer's often-tense two-party outgoing coalition with the Greens lost its parliamentary majority in the election, though it remains in office as a caretaker administration.

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The Freedom Party, which has seen its poll ratings rise since the election, called for Nehammer's resignation.

Its general secretary, Michael Schnedlitz, accused the chancellor of refusing to accept his election defeat and said it had long warned against a three-way coalition “on the German model” — a reference to the quarrelsome government in neighboring Germany that collapsed in November. Germany is holding an early election next month.