The Vanuatu Government has handed Prime Minister, Serge Vohor, a major defeat by tossing out his offer of diplomatic recognition for Taiwan.
Mr Vohor announced the deal two weeks ago during a trip to Taipei, but it angered his Cabinet which voted against it, saying it contravened the coalition agreement.
Mr Vohor's office has been adamant that the Ministers would come round at a meeting today in Port Vila, but the Deputy Prime Minister, Ham Lini, says the Ministers have formally and unanimously rejected the plan.
Mr Lini says they passed three resolutions.
These are; that Vanuatu has a one China policy; that it withdraws the offer of diplomatic recognition for Taiwan; and that the Government will ask China if it could provide additional aid.
Mr Vohor had approached Taiwan to try and find financial backing to cover the country's budget deficit and to fund its plans for more rural development.