"There will be consequences," he said adding "business as usual cannot continue."

Ankara had been given until early next week to move on allowing trade with EU member state Cyprus - a key obligation under an EU-Turkey customs agreement - with the European Commission expected to recommend on 6 December what the consequences of Turkey's non-compliance will be.

"The Presidency will immediately, together with the Commission, start preparing the handling of the continuation of Turkey's EU accession negotiations," a Finnish presidency statement said.

Brussels moves to keep talks on track

Reacting to the collapse of the negotiations, EU enlargement commissioner Olli Rehn indicated the commission would fight to keep the talks on track.

"The Commission thinks negotiations cannot be completely stopped. The train will slow down, but not stop," said the commissioner.

Mr Rehn in a speech also made a strong plea to EU capitals not to lose sight of the strategic importance of Turkey's EU aspirations, criticising politicians who "continuously question Turkey's vocation to join the European Union."

However, all parties are hemmed in with Turkey facing parliamentary elections next year making it hard to make concessions, while several EU member states, including the largest, do not want to let the issue slide without repercussions.

Talks faltered earlier this year when Turkey said it would not normalise relations Cyprus until the EU honours a promise to end the economic isolation of the Turkish-controlled northern part of the island – frantic diplomatic negotiations behind the scenes by Finland over the past weeks have not produced any results.

In a bid to get things moving, Finland last week laid down an ultimatum saying it was not willing to let the issue take over the agenda of an EU leaders meeting on 14-15 December.

Back to the UN

For its part, the commission said the Cyprus issue should be put back on the UN table following Helsinki's failure to secure an interim deal.

"The Finnish formula was realistic and aimed at providing a genuine win-win situation to the parties concerned. Yet it did not fly in the end," said Mr Rehn but added that after five EU presidencies in a row failed to reach partial agreements, "the essential conclusion we must draw is that a comprehensive settlement is the best way to solve the problems."

He call on EU leaders to ask for a resumption of the talks on a "comprehensive" UN settlement at their December summit in order to "encourage serious movement."