Indications are that Lt Governor Najeeb Jung, who met leaders of the three political parties, may send his recommendation to the President for dissolving the assembly any time.
While BJP declined the LG's offer to form a government, AAP and Congress made it clear that they were in favour of immediate elections.
The LG held consultations in the wake of the Supreme Court putting the issue on the fast track and giving him time till November 11 to explore the possibility of forming a government.
The court was hearing AAP's petition seeking early dissolution of the Assembly which has been under suspended animation since February after the fall of the AAP government.
Satish Upadhyay and Jagdish Mukhi of BJP, Haroon Yusuf of Congress and AAP's Arvind Kejriwal and Manish Sisodia met the Lt Governor.
"All the above parties expressed their inability to form the government. The Lt Governor would be sending his report to the Hon'ble President," a Raj Niwas release said.
Currently BJP, along with ally Akali Dal's lone MLA, has 29 legislators and would require the support of five more MLAs to prove majority in the 67-member Assembly.
BJP had emerged as the single largest party in the December Assembly polls winning 31 seats but fell four seats short of a simple majority. It had refused to form government then, saying it will not resort to any "unfair means" to take over the reins.
AAP had formed the government in Delhi with the support of Congress. The government led by Kejriwal had resigned on February 14 after the party's pet project, the Janlokpal Bill, could not be passed due to opposition from BJP and Congress.
President's Rule was imposed on February 17.
Jung had not favoured dissolution of the Assembly as recommended by the council of ministers headed by Kejriwal and kept the assembly in suspended animation.
The Lt Governor had last month sent a report to President Pranab Mukherjee seeking permission to invite BJP to form a government in Delhi. The Centre last week informed the Supreme Court that the President allowed Jung to invite BJP.
Sources in BJP said the decision not to accept an offer by the Lt Governor to take a shot at power was taken at a meeting of top central leaders of the party yesterday.
The party felt it should go for polls as Prime Minister Narendra Modi's popularity was going strong and enthusiasm among the party workers has increased following victories in assembly elections in Maharashtra and Haryana.
The sources said Modi was in favour of polls and that the RSS had also conveyed its view that the party should not form government adopting any "unfair means".
Commenting on the development, Upadhyay said BJP conveyed its stand to Jung and he will take the steps he wants to according to provisions of the Constitution.
Delhi BJP general secretary Ramesh Bidhuri said the party was confident of getting a clear mandate when elections are held.
"We are confident of getting 47 seats. The people of Delhi have seen the AAP government and will not support it again," he said.
AAP also welcomed the development saying "collective desire, will and vigilance of people have won over politics of immoral manipulations and unethical arrangements."
"In last eight months, every effort was made to "buy" our MLAs. They withstood all pressures n lived up to people's expectations. Salute to them," Kejriwal tweeted.
In another tweet, he said, "Finally.....Congratulations to the people of Delhi."
Congress reiterated its demand for holding of polls along with elections in Jharkhand and Jammu and Kashmir.
As LG is all set to recommend dissolution of the assembly, officials said bypolls to three assembly constituencies will not be held on November 25. The last date of filing of nominations for bypolls in three assembly constituencies is November 5.  

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