Construction giant Carillion asked the Government to provide funds of £20 million to help it secure more money from the banks and avoid going into administration, it is claimed.
Talks were held throughout the weekend between Government ministers and company officials in a bid to keep Carillion in business, but they broke up on Sunday evening without a deal.
Sources told the Press Association that Carillion wanted £20 million to help it secure more funds from banks, a far lower figure than had been previously speculated, but ministers were unwilling to offer financial support.
The Cabinet Office decline to comment.
Carillion's collapse into compulsory liquidation has put thousands of jobs at risk, but the Government said staff should go to work and would continue to get paid.
Meanwhile it emerged that small firms were still waiting for Carillion to pay bills going back several months.
Mike Cherry, chairman of the Federation of Small Businesses, said: "It is vital that Carillion's small business suppliers are paid what they are owed, or some of those firms could themselves be put in jeopardy, putting even more jobs at risk besides those of Carillion's own employees.
"When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses."
Carillion is understood to have public sector or public/private partnership contracts worth £1.7 billion, including providing school dinners, cleaning and catering at NHS hospitals, construction work on rail projects such as HS2 and maintaining 50,000 Army base homes for the Ministry of Defence.
It has seen its shares price plunge more than 70% in the past six months after making a string of profit warnings and breaching its financial covenants.
Shares in Britain's second biggest construction firm have been suspended on the London market following the liquidation announcement.
The group, which employs around 20,000 British workers, has been struggling under £900 million of debt and a £587 million pension deficit.
Its collapse poses questions as to why Carillion continued to receive Government contracts despite issuing a number of profit warnings.
Carillion chairman Philip Green said: "This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years."
Retirees already receiving their pensions will continue to receive payments, the Government has assured.
But there are around 27,000 staff involved in Carillion's defined benefit schemes which are likely to be transferred to the public Pension Protection Fund.
A spokesman from the PPF said: "We want to reassure members of Carillion's defined benefit pension schemes that their benefits continue to be protected by the PPF and will continue to be protected if or when their scheme enters the PPF assessment period."
Carillion had met lenders HSBC, Barclays, Santander and Royal Bank of Scotland on Wednesday to discuss options for reducing debts, recapitalise or restructure the group's balance sheet.
Sources had told the Press Association that a business plan tabled by the group during the meeting was knocked back because it failed to present a solid proposition for restructuring the business.
However, the company denied the plan had been rejected, adding that any restructuring of the business could result in a debt-for-equity swap.
The Government, pension authorities and stakeholders also met on Friday in an attempt to thrash out a rescue package, with talks spilling over into the weekend.
The Official Receiver has now been appointed alongside partners at accountancy giant PwC to oversee the liquidation of the company.
Banks are reportedly set to lose an estimated £2 billion as a result of the collapse.
Cabinet Office Minister David Lidington said it was "regrettable" that Carillion could not find suitable financing options, but taxpayers could not be expected to bail out a private sector company.
He added: "It is of course disappointing that Carillion has become insolvent, but our primary responsibility has always been keep our essential public services running safely.
"For clarity - all employees should keep coming to work, you will continue to get paid. Staff that are engaged on public sector contracts still have important work to do."
Unions have called for urgent reassurances over the jobs, pay and pensions of thousands of workers following the "disastrous" news.
Rail, Maritime and Transport union general secretary Mick Cash said: "The blame for this lies squarely with the Government who are obsessed with outsourcing key works to these high-risk private enterprises."
Jim Kennedy, the Unite union's national officer for local government, said a public inquiry was needed to answer questions about Carillion's conduct and the Government's decision to award it contracts.
In the wake of the collapse, infrastructure giant Balfour Beatty said it would take a £35 million to £45 million hit due to a joint venture agreement on three projects with Carillion.
The Financial Conduct Authority announced earlier this month that it had launched an investigation into the "timeliness and content" of announcements made by Carillion between December 7 2016 and July 10 2017.