Racing 92 and Stade Français have announced that their proposed merger is off, reports The Telegraph.
The two French powerhouses shocked the rugby world last week when they revealed plans to pool their resources from next term and form a Top 14 Paris super club.
However, the controversial move has now been called off, with Racing chief Jacky Lorenzetti saying: "I have decided to give up this beautiful project."
The planned merger has courted criticism since last Monday's announcement, which stunned players from both clubs, including those on international duty with France.
On Wednesday, Stade's squad went on an 'open-ended strike', before later in the week staging a protest alongside supporters outside the headquarters of the Ligue Nationale de Rugby (LNR) in Paris.
The fall-out continued on Friday when both of the clubs' respective Top 14 fixtures scheduled for this weekend were postponed.
However, with further talks between Top 14 champions Racing and Stade having initially been scheduled for Monday, the two clubs announced on Sunday that the merger would no longer be happening.
Lorenzetti, whose club has the likes of ex-All Blacks star Dan Carter on its books, said on the Racing website: "In agreement with [Stade president] Thomas Savare, the merger will not take place.
"We decided to bring Stade Français Paris and Racing 92 together to create a great Ile-de-France club of tomorrow and ensure it of a long-lasting and brilliant future.
"I have decided to give up this beautiful project."
Lorenzetti said that he had "heard and understood the strong reservations" raised by the plans but felt the majority would be in favour and that the advantages would outweigh the negatives.
He also said that he "did not expect such resistance, especially internally!"
Stade also confirmed in a statement on their website that the merger was no longer taking place.