Bosnia-Herzegovina faces a ban from all international matches after they refused to cut their three-member presidency to one at a meeting on Tuesday.
The Bosnian federation currently consists of two associations: one a Bosnian Serb and another shared by Bosniaks and Bosnian Croats, headed by a Bosniak, a Croat and a Serb to reflect the country's ethnic division after the 1992-95 war.
The situation has been tolerated by football's governing bodies for years due to the political situation in the country. However, FIFA and UEFA told the federation last October that if it did not conform to the rules of single presidency by end of March, it would be suspended on April 1.
"It's hard. I'm taking this very hard," Muhidin Rascic, a Bosniak member of the federation's executive board, said. "Only I know how much of my life I have invested into all of this and now it's gone."
Bogdan Ceko, the head of the Bosnian Serb association, told media after the meeting that he "does not feel personally responsible for this but we can talk about a collective responsibility".
The dispute looks set to damage Bosnia's 2012 European Championship campaign, as they face Romania on June 3, and Albania on June 7, although they will avoid suspension if the federation agrees to FIFA and UEFA's demands.
Any suspension would first have to be confirmed by the emergency committees of FIFA and UEFA, chaired by their respective presidents Sepp Blatter and Michel Platini.