The Southend and Westcliff Hebrew Congregation minister who was sacked for alleged "gross misconduct" but retains the support of members has refused an offer of "new employment" with the synagogue.
Since Rabbi Binyamin Bar's dismissal in January, he has continued to conduct services at the behest of congregants, who overwhelmingly backed his reinstatement at an EGM.
He has also now resumed officiating at funerals and stone-settings.
In a short statement on Wednesday, shul president Stephen Salt said: "Rabbi Bar has refused the new contract offered to him and discussions are ongoing." He declined to elaborate.
Although Rabbi Bar would not comment, a close friend, Dennis Baum, attributed the impasse to the terms of the offer.
He has been advised not to lose his employment protection
"Rabbi Bar hasn't refused a new contract, he has refused a new job," Mr Baum claimed. If he had accepted, "he would be starting from scratch and they could sack him any day, because in the first two years you have no employment protection. He has been advised by his solicitor not to lose his employment protection".
The deadlock was "very frustrating" for the rabbi's supporters. "We thought it was all over and we'd have peace."
A resolution of the dispute is now considered unlikely before the synagogue council election on May 10.