Yemen's dominant Houthi movement on Sunday gave political factions three days to agree a way out of a crisis that led to the resignation of President Abd-Rabbu Mansour Hadi before the group imposes its own solution.
Yemen has been in political limbo since Hadi and the government of Prime Minister Khaled Bahah resigned less than two weeks ago after the Houthis seized the presidential palace and confined the head of state to his residence in a struggle to tighten control over Yemen.
The Houthis, Shi'ite Muslim rebels turned power brokers, have been holding talks with major political factions trying to agree on a way out of the standoff.
Talks have been revolving around either persuading Hadi to rescind his resignation or to form a presidential council to run the country for an interim period.
But no deal has been reached.
One of the proposals of the powerful Shi'ite party was to form a presidential council, a national council and a government, sources who took part in conference of Houthis told Reuters.
"The political factions have been given three days to come out with a solution that fill the vacuum; otherwise the revolutionary committees will handle the situation and the transition period," according to the conference's final communique.
Political parties in Yemen, including the Houthis, have spent several days discussing the possibility of forming councils to fill the power vacuum left by Hadi's resignation until a longer term settlement can be agreed.
Yemen's stability is particularly important to Saudi Arabia as it borders the world's top oil exporter. Yemen is also fighting one of the most powerful branches of Al Qaeda, with the help of U.S. drone strikes.
Demonstrations have been taking place in Yemen since the Houthis overran the capital Sanaa in September.
On Sunday, two Yemeni university students were seized as they were protesting against Houthis, activists told Reuters.
(Reporting by Mohammed Mukhashaf and Mohamed Ghobari; Writing by Sami Aboudi and Reem Shamseddine; Editing by Stephen Powell)