The party of former Pakistani Prime Minister Nawaz Sharif is due to meet shortly to decide whether to remain in the country's new government.
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Further talks in London at the weekend failed to break the impasse.
Analysts say the failure to resolve the differences have put the six-week-old coalition under strain.
Some reports say Mr Sharif's PML-N, the junior party, may now pull out of the coalition.
It has already threatened to do so, but senior officials have suggested it would continue to offer its support to the government, for now at least.
'Disappointed'
The alliance had set Monday as the deadline to reinstate the judges, but Mr Sharif and the Pakistan People's Party leader Asif Zardari wrapped up talks in London without reaching a deal.
"I think every Pakistani is disappointed with the outcome of these talks," said Mr Sharif.
"Despite very sincere efforts we have not been able to resolve the deadlock."
The new government had initially promised to restore the senior judges by the end of April but disagreed over how to do it.
Ten days ago, following earlier talks, Mr Sharif announced that all the senior judges sacked by President Musharraf last year would be reinstated on 12 May.
Mr Sharif's party has campaigned for the unconditional reinstatement of the judges.
Mr Zardari wants the reinstatement of the judges to be part of a larger package of constitutional amendments which would include reducing their powers.
President Musharraf sacked about 60 judges - some sitting in the Supreme Court - in November 2007, after declaring a state of emergency.
The Supreme Court had been due to rule on whether his re-election was legal.
They had also been due to rule on a controversial amnesty covering Mr Zardari and his wife Benazir Bhutto, who was later assassinated.
(BBC)
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