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The Formula One Teams' Association announced on Thursday night that it is setting up a breakaway championship.

Following a four-hour meeting at Renault's Enstone factory, the eight members of FOTA - Ferrari, McLaren, Renault, BMW Sauber, Toyota, Brawn, Red Bull Racing and Scuderia Toro Rosso - said they had grown frustrated with the FIA's stance against the organisation, and had no option but to create a series of their own.

"The teams cannot continue to compromise on the fundamental values of the sport and have declined to alter their original conditional entries to the 2010 World Championship," said a statement issued by FOTA after the meeting.

"These teams therefore have no alternative other than to commence the preparation for a new Championship which reflects the values of its participants and partners. This series will have transparent governance, one set of regulations, encourage more entrants and listen to the wishes of the fans, including offering lower prices for spectators worldwide, partners and other important stakeholders.

"The major drivers, stars, brands, sponsors, promoters and companies historically associated with the highest level of motorsport will all feature in this new series."

F1 teams were given until Friday evening to remove the conditions attached to the provisional entries they posted earlier this month, or risk being left off the grid in 2010.

FIA president Max Mosley wrote to the teams yesterday offering them some of the concessions that they wanted to see regarding governance of the sport, but made it clear that he was sticking to plans for the introduction of a budget cap.

In his letter, Mosley also urged the teams to sign up to the championship before sorting out the final version of the regulations and a redrafted Concorde Agreement.

In response to that letter, the teams met at Renault's Enstone headquarters on Thursday evening for lengthy talks, where they finally decided that there was no way a compromise deal could be reached with the FIA.

The teams expressed frustration that their efforts to try and improve F1 had been rebuffed by the governing body and the sport's commercial rights holder.

"Since the formation of FOTA last September the teams have worked together and sought to engage the FIA and commercial rights holder, to develop and improve the sport," said the statement.

"Unprecedented worldwide financial turmoil has inevitably placed great challenges before the F1 community. FOTA is proud that it has achieved the most substantial measures to reduce costs in the history of our sport.

"In particular the manufacturer teams have provided assistance to the independent teams, a number of which would probably not be in the sport today without the FOTA initiatives. The FOTA teams have further agreed upon a substantial voluntary cost reduction that provides a sustainable model for the future.

"Following these efforts all the teams have confirmed to the FIA and the commercial rights holder that they are willing to commit until the end of 2012.

"The FIA and the commercial rights holder have campaigned to divide FOTA.

"The wishes of the majority of the teams are ignored. Furthermore, tens of millions of dollars have been withheld from many teams by the commercial rights holder, going back as far as 2006. Despite this and the uncompromising environment, FOTA has genuinely sought compromise."

The announcement by FOTA looks certain to overshadow the British Grand Prix, which takes place at Silverstone for the final time this weekend and which Mosley is expected to attend tomorrow.

With FOTA's stance now seemingly leaving no room for a deal possible, it's likely that more new teams will be added to the FIA's 2010 Formula 1 entry list.

The inclusion of Ferrari, Red Bull Racing and Scuderia Toro Rosso on that roster remains open to debate, however, with the FIA claiming that the teams committed themselves to F1 in a deal agreed several years ago.