Weeks of negotiations have followed a July 19 poll that delivered another hung parliament, with neither the Liberals (14) nor Labor (10) getting the 18 seats needed for majority.
Liberal Premier Jeremy Rockliff was recommissioned but Labor leader Dean Winter planned to test his numbers in a no-confidence motion when parliament resumes on Tuesday.
But Labor's bid fell flat on Monday, with the five-seat Greens, whose support they require to govern, announcing they were unable to back Mr Winter.
Greens leader Rosalie Woodruff, whose party had offered an olive branch to Labor, lashed Mr Winter's lack of compromise.
Mr Winter refused to make policy concessions to the cross bench during negotiations and repeatedly ruled out "doing a deal" with the Greens to govern.
Mr Winter had put forward a broad "stability framework" and offered to make an independent upper house MP treasurer.
"We couldn't give Labor a blank cheque ... when they have shown clear hostility and contempt for working with the Greens and the people we represent," Dr Woodruff said.
The Liberals have made several recent policy concessions to woo the cross bench, including a review of salmon farming and a ban on greyhound racing by 2029.
Dr Woodruff made it clear the Greens also didn't have confidence in the Liberals and it was with great disappointment that they couldn't work with Mr Winter.
The Labor leader had mere hours earlier maintained he was in the running to be premier, at the helm of a Labor Party that picked up 26 per cent of the primary vote - its worst result in Tasmania.
Standing alongside salmon workers, he accused Mr Rockliff of backflipping and being untrustworthy by announcing the aquaculture review.
Independent Kristie Johnston on Monday also revealed she was unable to support an "uncompromising" Labor, but warned the Liberals were still "on notice".
Fellow independent, former Labor leader David O'Byrne, on Sunday threw his support behind Mr Rockliff as premier.
"The Labor Party, sadly, had a swing against them and produced their worst electoral outcome in their history," he said.
"While it is not a mandate for the Liberal government and I don't agree with a number of policy issues ... that vote cannot be ignored."
The Liberals have governed since 2014 and have been in minority since 2023 when two MPs quit the party to sit as independents.
The snap election in July, Tasmania's fourth in seven years, delivered a cross bench including five independents and a Shooters, Fishers and Farmers MP.
The poll was triggered after a no-confidence motion in Mr Rockliff passed parliament in June with support of Labor, the Greens and several independents.
The motion was critical of Tasmania's ballooning net debt and Mr Rockliff's handling of delayed and over-budget infrastructure projects.
The Liberals got 40 per cent of the primary vote at the election with a swing of 3.2 per cent, while Labor's vote dipped 3.1 per cent.
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