EU employment ministers didn't agree on rules for a maximum 48-hour European workweek and on granting more rights to temporary workers.
The two pieces of EU legislation - some of the most fiercely contested bills in recent years - would be discussed again in 2008, the Portuguese EU presidency said.
The bill on maximum working time, updating guidelines from 1993, was drafted after the EU's highest court in Luxembourg ruled in 2000 that time spent on call must be counted as working time.
It was debated Wednesday together with draft rules on employing workers through labor agencies.
"I'm sure we'll be able to overcome the final obstacles in 2008 and work to end this deadlock," said Portugal's Labor Minister Jose Vieira da Silva.
EU Social Affairs Commissioner Vladimir Spidla said the discord on the basic issues of the labor bill was "extremely disappointing."
Several proposals on how to change the current labor rules have fallen through over the last four years.
On Wednesday, Britain led the group of countries opposing the plan to grant temporary workers the same conditions as full-time employees after six weeks of employment. Germany and others also wanted to prolong the period.
Britain, Poland, Estonia and other states also wanted to maintain an opt-out from the 48-hour workweek, which is currently calculated as an average over a four-month period.
Countries like France and Sweden have long believed in social protections aimed largely at guaranteeing balance between work and private life
Britain, on the other hand, bases its business culture on an American model that keeps government interference at a minimum in the belief that freedom promotes growth and opportunity.
Some of the new EU members in Eastern Europe also are in favor of more flexible work rules to help them become as rich as more established EU states.
Some European countries use the labor loophole mainly for their health care and emergency services. But in Britain it is widely used across the private and public sector.
With an absence of clear new rules, countries will apply various exemption clauses - at the risk of being taken by the EU's executive Commission to the European Court of Justice.