The country's major political parties dismissed the move and didn't attend the press conference at Sanaa, where it was announced.
"No one will recognize this Cabinet," said spokesman Rageh Badie of the internationally recognized Yemen government, exiled in neighboring Saudi Arabia. "It is a suicidal move."
A day earlier, the mediated talks were halted after the rebels, known as Houthis, offered to hand over their positions to "the military," without giving details or specifying which military, pro-government officials said.
The Houthis had also requested that their fighters be accepted into the Yemeni army, Houthi officials said. Pro-government officials said the request hindered the talks further.
"The (Houthis) also said they will cooperate with the U.N., but then didn't mention the U.N. Resolution at all," one pro-government official complained. That resolution obliges the Houthis to withdraw from areas they seized and surrender weapons they took from military and state institutions.
Houthi officials described the government's new condition as "crippling" for prospects of reaching an agreement.
All officials requested anonymity because they are not authorized to brief reporters.
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