Catalonia held a controversial independence referendum earlier this month drawing the condemnation of leaders in Madrid and Brussels.
After a huge Yes victory during a polling day marred by police brutality, Catalonia initially signed a letter declaring independence before immediately suspending it.
Spain has since refused to entertain independence talks despite huge protests calling for peaceful discussion.
And today Catalan leader Carles Puigdemont said the regional parliament could vote on a formal declaration of independence from Spain if the central government failed to hold talks.
He has ignored a deadline to drop Catalonia’s secession bid and instead accelerated moves for an independent state.
In response Madrid said it would take extreme steps and remove the autonomy of Catalonia.
Catalonia is set to declare independence from Spain
Mr Puigdemont threatened independence in a letter to the Spanish government.
He said: “Dear President Rajoy, the people of Catalonia on 1 October voted for independence in a referendum with the endorsement of a high percentage of voters. A percentage greater than the one that has allowed the United Kingdom to start the Brexit process and with a greater number of Catalans than the Statute of Autonomy of Catalonia.
“On 10 October the Parliament held a session to assess the outcome of the referendum and its effects and I proposed to postpone the effects of that popular decision.
“I did it to give room to dialogue that has repeatedly been offered to you and me by political and social institutions and leaders from all over Europe and the rest of the world. In this regard, in my letter of Monday, I proposed to hold a meeting that has not yet been attended.
“Similarly, the request to reverse repression has not been met either. On the contrary, it has increased and has led to the imprisonment of the president of Ómnium Cultural and the president of the Catalan National Assembly, institutions of proven civic, peaceful and democratic trajectory.
“The decision to apply article 155 belongs to the State Government, with prior authorisation from the Senate. Despite all efforts and our willingness of dialogue, the fact that the only answer is the suspension of autonomy, indicates that you are not aware of the problem and do not want to speak.
“Finally, if the State Government persists in preventing dialogue and continuing repression, the Parliament of Catalonia may proceed, if it deems it appropriate, to vote on the formal declaration of independence, which didn’t happen on October 10.”
He made the letter public shortly before the 10am deadline (9am BST) he had been given by Spain to retract his independence claim passed.
In response, Spain threatens to completely remove Catalonia’s power of autonomy.
Madrid said Prime Minister Mariano Rajoy would trigger Article 155 of the constitution, suspending Catalonia’s autonomy.
A special cabinet meeting will be held on Saturday.
Dr Sally-Ann Kitts of the University of Bristol said Madrid’s decision to remove autonomy would only “harden the resolve” of pro-independent Catalonia campaigners.
She said: “Today in all likelihood the Spanish government will start the process to strip Catalonia of its autonomy through the application of Article 155 of the constitution.
“What isn’t clear to anyone is how this action will do anything other than harden the resolve of the more than three million people who turned out to vote on 1 October, in spite of the repeated brutal actions of the Spanish police.
“The confrontation between Catalonia and Spain remains without any resolution in sight as Spanish Prime Minister Mariano Rajoy continues to ignore the appeal for dialogue made last week by the Catalan President Carles Puigdemont.
“The Spanish state seems intent on pressing forward with the application of threats of judicial action against all those involved in what it describes as unconstitutional and illegal activities.”