Junior doctors look likely to carry out their threat to strike after three weeks of talks with NHS bosses and the government failed to resolve the bitter contract row.

Both sides are increasingly pessimistic about resolving their differences when they meet for the last time on 4 January, following a blunt warning from the British Medical Association (BMA) to ministers to make major last-minute concessions or face industrial action.

Sources say England’s 45,000 junior doctors are likely to stage their first walkout in 40 years on 13 January by refusing to provide anything other than emergency cover in hospitals. The BMA is preparing to issue a statement on Monday outlining how many days of action it will be taking and what form the withdrawal of labour will take if the talks fail.

Although negotiations during December overseen by the Advisory, Conciliation and Arbitration Service (Acas) have led to some progress, both sides agree that they have not found a compromise on fundamental areas of disagreement, including doctors’ pay and hours.

Dr Johann Malawana, leader of the BMA’s junior doctors committee (JDC), underscored the deep divisions that remain in an update to the 38,000 trainee medics whom the BMA represents.

Malawana said the recent negotiations between the BMA, NHS Employers and the Department of Health had led to “significant improvements to the offer that frankly so many of us were appalled by in November”. But he said the JDC’s evaluation of progress so far showed that “whilst significant ground has been made ... there are still a couple of absolute areas of disagreement”.

In what NHS Employers and the Department of Health see as an ultimatum, Malawana added: “It is therefore absolutely clear that should we not be able to reach an acceptable outcome by 4pm on 4 January, the BMA will need to commence serving notice as per its mandate, to the NHS, for industrial action the following week.”

Junior doctors were due to walk out on 1, 8 and 16 December after 98% of them voted for strike action in a BMA ballot in November. But the action was called off at the 11th hour when Acas tried to broker a deal to avoid disrupting hospital services.

One key sticking point is understood to be the government’s desire to abolish “pay progression” – automatic annual salary increases – for junior doctors in line with its aim of phasing it out across the public sector.

Another is the JDC’s belief that the government’s promised introduction of a seven-day NHS in urgent and emergency care services by 2020 will lead to junior doctors – all medics below the level of consultant – working longer hours in future for the same, or less, money.

The atmosphere between the two sides, which was initially positive, has soured. BMA sources privately accuse the Department of Health of “intransigence” and “wanting to secure a political ‘win’ over junior doctors”. For their part, NHS Employers and department officials believe that some junior doctors are determined to go on strike to force the government into a full climbdown.

One source with knowledge of the negotiations said: “Whatever has been negotiated up until now, there are two or three fundamental sticking points that the DH [Department of Health] and NHS Employers aren’t able to concede. And if they can’t concede those points by Monday, there will be industrial action. The BMA is already preparing itself for that, probably starting on 13 January.”

In a sign of growing mistrust, Danny Mortimer, chief executive of NHS Employers, made clear his annoyance that Malawana had issued such a detailed update on the progress of talks, which he posted on 24 December.

“Sensitive negotiations are not a spectator sport and I still do not propose to provide a running commentary on their progress since the Acas agreement of 30 November 2015. I am disappointed therefore that this BMA communication has unexpectedly appeared,” Mortimer said.

“Talks with the BMA about the proposed new contract for junior doctors have been adjourned until 4 and 5 January 2016, though work to refine details is continuing in the interim between members of our teams. We believed that we have seen progress and we will resume discussions in the new year.”

Malawana’s tough language in parts of his statement have also led observers to conclude that the talks were not proving constructive enough to find a resolution. “I, and the JDC, have absolutely no intention of standing by whilst the government pushes current and future generations of doctors out of the NHS and to leave the UK.

“It simply is unacceptable to devalue and denigrate doctors and the medical profession to the point where medicine in the UK is no longer a profession that the majority of doctors would recommend,” he said.

Malawana posted his update a day after talks finished on 23 December for the Christmas break. He stressed that the progress made had not satisfied the BMA’s key demands that the new contract should be safe for patients and fair for doctors.

Another key issue is thought to be the idea of the health secretary, Jeremy Hunt, that fines for hospitals that force junior doctors to work beyond their maximum hours should be replaced by a new system of oversight of young medics’ working hours by the Care Quality Commission, the NHS care regulator. The BMA is adamant that the current system should remain in place.

A Department of Health spokeswoman said: “We have been making good progress with the BMA, and look forward to further discussions in the new year.As we have consistently said, talks are always better than strikes and we are prepared to talk about anything within the pay envelope as long as we improve patient safety by moving towards a seven-day NHS. Our proposals offer better basic pay and safety for junior doctors, with a shorter working week.”