The Treasury Board of Canada rejected an offer submitted by the union representing around 155,000 striking civil servants, saying that the demands are "unaffordable."
"We will not sign agreements that the country cannot afford, nor ones that severely impact our ability to deliver services to Canadians," the Treasury Board, which oversees public administration, said Wednesday.
The strike by about 155,000 federal government workers, represented by the Public Service Alliance of Canada, entered an eighth day on Wednesday, affecting a wide range of public services from tax returns to passport renewals.
Meanwhile, union President Chris Aylward called on Prime Minister Justin Trudeau to get involved in negotiations and give his Treasury Board a new mandate.
"He can either get involved personally and help settle this dispute or he can turn his back on the workers who are striking," Aylward told reporters on Parliament Hill.
"We'll be out here for as long as it takes," he added, as workers around him cheered.