"The negotiations have completely ended," said Abdullah al-Olaimi, deputy director of the Yemeni president's office and a member of the government team to the UN-brokered talks being held in Kuwait.
"We have participated and exercised patience for the sake of our people and we end the negotiations for their sake," Olaimi said on his Twitter account.
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UN special envoy Ismail Ould Cheikh Ahmed said the rebels' move "contravenes" their commitment to the peace process and "represents a grave violation" of UN Security Council Resolution.
The Shiite Huthi rebels and the General People's Congress of former president Ali Abdullah Saleh earlier announced the formation of "a supreme political council of 10 members".
They did not name the council's members.
"The aim is to unify efforts to confront the aggression by Saudi Arabia and its allies," they said in reference to the Riyadh-led Arab coalition that launched a military campaign against the rebels in March 2015 in support of Hadi.
The job of the council would be to "manage state affairs politically, militarily, economically, administratively, socially and in security".
Ould Cheikh Ahmed who has been brokering 100 days of talks aimed at a peaceful settlement condemned the move without formally announcing the collapse of negotiations.
"This is a clear violation of the Yemeni constitution" as well as Resolution, he said in a statement released in Kuwait.
The resolution calls on the Huthis to withdraw from territories they occupied in 2014, to hand over their arms and return state institutions to the legitimate government.
Yemen's Foreign Minister Abdulmalek al-Mikhlafi said the rebels' announcement amounted to a "new coup".
The rebels have "missed an opportunity for peace which the Yemeni people needed", Mikhlafi said on his Twitter account.
"We call on the international community to condemn the new coup against the constitutional legitimacy and hold the Huthi-Saleh alliance responsible" for the failure of the talks, he said.
The rebels overran Sanaa in September 2014 and expanded their control to other parts of Yemen.
In February last year, they had set up a "Supreme Revolutionary Council" to run the country after they announced the dissolution of the government and parliament.
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