The Taliban in Afghanistan have suspended preliminary peace negotiations with the United States.
The group blamed the Americans' "ever-changing position" and said US efforts to involve the Afghan authorities was a key stumbling block to further talks.
The Taliban regard the Kabul government as illegitimate.
Meanwhile President Karzai urged Nato troops to leave Afghan villages after a US soldier killed 16 civilians. US officials denied any major rift.
Officials told the BBC that the priority for Afghan government was to avoid civilian casualties at any cost.
President Hamid Karzai told the visiting US defence secretary Leon Panetta that Afghan troops should take the lead for nationwide security in 2013.
In a statement issued on Thursday, the Taliban said they had agreed to talks focusing on a political office being established in Qatar and on a prisoner exchange.
They said they were suspending the talks because of "the shaky, erratic and vague standpoint of the Americans".
US diplomatic sources say the Taliban were told by US negotiators that the Afghan government had to be a part of any negotiations.
The Taliban statement reiterated that the group "considers talking with the Kabul administration as pointless."
Other conditions reportedly set by the US in the talks include accepting of the Afghan constitution - which the Taliban have rejected - and publicly denouncing al-Qaeda.
The BBC's Quentin Sommerville in Kabul says the Taliban's suspension of the talks is a significant setback for efforts to begin substantive negotiations with the insurgents.
It was thought that a deal to exchange five Taliban fighters currently held at Guantanamo Bay for a kidnapped American soldier was only weeks away, our correspondent adds.
The killing of 16 Afghan villagers - including women and children - on Sunday has intensified calls for the withdrawal of foreign troops.
A statement from President Karzai's office said that as a result, "international security forces have to be taken out of Afghan village outposts and return to (larger) bases".
The American soldier accused of carrying out the shooting was based at a small compound in Kandahar province. Mr Karzai said the incident had harmed relations with the US.
US officials later appeared to play down the statement. Pentagon spokesman George Little told reporters it reflected "President Karzai's strong interest in moving as quickly as possible to a fully independent and sovereign Afghanistan".
He added: "We believe that we need to continue to work together because that's an American goal as well."
The US soldier - who has not been named or charged - was flown to Kuwait on Wednesday.
Afghan MPs had demanded that he be tried in Afghanistan. Correspondents say that scenario is very unlikely.
Nato and the US administration have insisted that there will be no change of strategy in Afghanistan.
Nato's International Security Assistance Force plans to withdraw all of its combat forces by the end of 2014. American troops are also following that timetable.