Out On All Saints
Pictures: BRENNAN/MURPHY
The sisters told bandmates Melanie Blatt and Shaznay Lewis that they no longer want to work with them.
Insiders say a statement is being prepared announcing a split in case the talks fail.
Relations between the four girls became increasingly strained over Christmas.
A question mark now hangs over a nationwide tour in May.
One insider told me: "Nicole and Natalie resent the fact that Shaznay and Melanie are the real talents. And Shaznay and Melanie are jealous of all the attention the sisters get.
"Melanie and Shaznay will probably try to continue as All Saints. The sisters are likely to take some time out."
Of the band's many rows, this is their most serious. I revealed in November that Melanie had walked out.
But the girls seemed to have patched up their differences and put on a united front at the MTV Europe Awards in Stockholm where they were voted best pop act.
Then they cancelled a promotional tour of Australia and Japan blaming "illness."
The latest row came to a head at the Capital FM Christmas Live concert when Natalie and Shaznay argued over who would wear a jacket they both liked. They have not talked since.
Nic and Nat were all smiles on a night out with pop star boyfriends Liam Gallagher and Liam Howlett despite the rift.
After dinner at an exclusive restaurant in London's Knightsbridge, Oasis frontman Liam, who looked like he was dressed for a milk round, pounced on Nic in their car.