The leader of the Lebanese Shia group Hezbollah insisted that one of its Sunni allies be given a portfolio in a new Lebanese cabinet, and indicated it would be ready to go back to square one in negotiating a government if necessary.
In a televised speech on Saturday, Sayyed Hassan Nasrallah also warned Israel that his Iranian-backed group would respond to any attack on Lebanon and urged his country to withstand diplomatic pressure over its rocket arsenal.
Hezbollah's demand for one of its Sunni allies be given a portfolio in the new Lebanese government is at the heart of a row that has obstructed a final agreement six months since a parliamentary election.
The formation of a new government is necessary before any moves can be made towards fiscal reforms which the International Monetary Fund said in June are needed immediately to improve debt sustainability.
Hezbollah says one of its Sunni allies must be represented in the government to reflect their election gains.
But Prime Minister-designate Saad al-Hariri, who is Lebanon's main Sunni politician and enjoys Western backing, has ruled out allocating any of his cabinet seats to them.
Lebanon's political system requires government positions to be allotted along sectarian lines.
Nasrallah said rejecting a Sunni ally from its "March 8" camp amounted to exclusion of a section of Lebanese.
"We were sincere when we spoke of a national unity government. There is no national logic, or moral logic, or legal logic … for anyone in Lebanon to come out and say 'it is forbidden for the March 8 Sunnis to be represented in the Lebanese government," Nasrallah said.
"If it is forbidden, come let's talk again from the start," he said, adding: "We don't want conflict, or tension, or escalation."
President Michel Aoun vowed earlier on Saturday to find a solution to the problem. Though a political ally of Hezbollah, Aoun has sided with Hariri in the row.
Hezbollah, groups and individuals that support its possession of weapons won more than 70 of the 128 seats in the May 6 parliamentary election.
Hezbollah is proscribed as a terrorist group by the United States. The group last fought a major conflict with Israel in 2006, since when it has grown militarily stronger as a major participant in the Syrian war.
Nasrallah said Israel had recently tried to increase pressure over the group's rocket arsenal and to create "a state of intimidation and threat that if this matter is not dealt with, it (Israel) will deal with it". Israel had used "the Americans and even some European states" in this effort, he said.
"I say to Lebanon that it must bear this level of diplomatic pressure," Nasrallah said. "Any attack on Lebanon, any air strikes on Lebanon or bombardment – we will certainly respond," he said.