Updated 10.15am

Spain's government has said it will trigger Article 155 of the constitution, allowing it to suspend Catalonia's political autonomy. 

The Spanish cabinet will proceed on Saturday with the measures to impose direct rule of the region. 

The announcement came after Catalan leader Carles Puigdemont said his parliament could vote on a formal declaration of independence if Spain continued to refuse to hold talks.

Mr Puigdemont ignored a 10am deadline to retract an ambiguous declaration of independence he made last week.

Instead he issued a letter demanding further dialogue, minutes before the deadline imposed by Spanish Prime Minister Mariano Rajoy.

The letter said: "If the government continues to impede dialogue and continues with the repression, the Catalan parliament could proceed, if it is considered opportune, to vote on a formal declaration of independence."

Catalan regional President Carles Puigdemont. Picture by: Manu Fernandez/AP/Press Association Images

In a statement released after the deadline passed, the Spanish government said: "The Government will do everything in its power to restore legality and constitutional order as soon as possible; to restore peaceful coexistence among citizens; and to curb the economic deterioration that legal insecurity is causing in Catalonia."

The statement denounces the attitude of Catalan leaders, saying the instability is causing "serious damage" to their coexistence. 

About 40% of 7.5 million Catalans voted in a disputed independence referendum earlier this month, with 90% of those backing independence from Spain.

Mr Puigdemont did not commit to a formal declaration of independence in a speech earlier this month, and has called for further EU-mediated talks.