They are refusing to appear in Saturday's Test against Argentina at Twickenham unless the dispute is resolved.

Coach Clive Woodward has warned the players they have until 1100 GMT on Wednesday to make themselves available, or he will pick an alternative squad.

Contract talks broke down on Monday night between players' representatives - captain Martin Johnson, Lawrence Dallaglio and Matt Dawson - and a RFU committee chaired by chief executive Francis Baron.

The divide appears to be over the guaranteed income increase through international appearances.

While Baron's offer was reported to have guaranteed a 60% increase in pay, Johnson and his players were holding out for 6% more. A further 20% may have been available pending on results.

Woodward said: "This is the saddest day in the history of English rugby.

"I feel badly let down by players I have done so much for in the last couple of years."

Woodward said the players were due to attend training on Wednesday morning, but their participation was "unlikely".

Johnson said the negotiations had been frustrating and inconclusive. He accused the RFU of being "old-fashioned, patronising and arrogant".

He added: "It's not just an issue about money. It's the principle, the way the RFU have handled the situation.

"They are affecting the guys' livelihoods on a matter of principle."

'Desperately upset'

Former captain Dawson said the players would ignore Woodward's ultimatum unless their demands were met.

And he called on the first team's likely replacements to stand firm against the RFU.

"For the players this is the worst case scenario. We are all desperately upset it had to come to this. We still really want to play on Saturday," Dawson told BBC Five Live.

"I would like to think that other players can see the larger picture that is being painted by players who are possibly sacrificing their international careers."

Woodward will get another chance to speak to the players on Tuesday night.

The England squad left their Surrey base on Tuesday, with less than 24 hours to report back for training. Otherwise, the likelihood is they will be playing club rugby at the weekend.

Woodward said: "Whatever happens, there will be an England side out there on Saturday. I just hope whoever runs out on Saturday gets a standing ovation from the crowd."

Chief executive Baron claimed the latest financial inducements to the national squad had been on a ground-breaking level.

Baron said: "Clive and I are at one on this. We both want to build a World Cup-winning side, we have worked together and I don't think we have left any stone unturned.

"It was a package for a World Cup-winning side."