Boris Johnson and Andy Burnham were talking on the phone, as they tried to pull out a deal on financial support.
Greater Manchester is expected to impose strict coronavirus restrictions after talks between local leaders and the government ended without an agreement.
Public Secretary Robert Jenrick, who had set the deadline for Greater Manchester to enter Tier 3, said no agreement had been reached.
Prime Minister Boris Johnson, who is expected to hold a press conference in Downing Street at 5pm, has made it clear he will put the move on Tier 3 if the situation escalates.
Greater Manchester mayor Andy Burnham will address the media at 4pm.
It is unclear when the move to Tier 3 will take effect.
This would mean that the tourist attractions and bars in Greater Manchester would be closed, except for over-the-counter, and betting shops, casinos, bingo halls, adult play centers and soft play facilities would also be closed.
Separate families will also be prevented from mixing in and out, including in private gardens.
Local leaders have been demanding that the government provide a total of £ 75m, after ministers promised £ 22.4m for alternatives and an undisclosed amount of “business support”.
They had been rushing to find a deal at 12pm Tuesday – a deadline set last night by Mr Jenrick.
A source political deputy political editor Sam Coates: “We asked for 75. They donated 60. We have dropped to 65 but they still won’t change. 60 was unacceptable because [it was] better than Lancashire / Liverpool.”
A government source political analyst Beth Rigby that the talks had “dropped more than £ 5m” and “in our opinion we have moved too much”.
Manchester Central MP Lucy Powell said the government “is clearly not interested in sponsoring businesses and protecting jobs AND protecting health because they are ready to cause more than £ 5m (a small portion of what they have spent elsewhere)”.
“This is a sensitive policy, not a public one,” he added.
Moving Greater Manchester into Tier 3 could take nearly three million people to the highest COVID-19 limit, as the UK struggles with an increase in the number of coronavirus cases and deaths.
The premier told senior cabinet members on Tuesday that he “wanted to work constructively with leaders in Greater Manchester” but “cases continue to be very high across the region”.
“The most worrying increase is in the 60+ group where the number of cases tripled in 15 days to October 12,” he added.
Downing Street later confirmed that Mr Johnson and Andy Burnham had spoken on the phone during lunch hours on Tuesday.
Andrew Gwynne, Denton and Reddish Labor MP, challenged the chancellor in parliament, saying local leaders were only asking for “proper financial support … after 12 weeks of failure to stop” and asked: “Why does this government hate Greater Manchester?”
Rishi Sunak said he was disappointed “with Mr Gwynne’s voice and politicians should” act in a constructive manner “, adding that he was already” helping those most at risk in our society “.
Earlier, Mr Burnham criticized what he called “provocative protection” and “night warning” by Mr Jenrick.
The mayor of Greater Manchester has accused ministers of “trying to invest less” in their £ 22.4m pledge.
But he said he would “accept” the Tier 3 nomination if Mr Johnson chooses to do so, because it is “the prerogative of the prime minister” and “will not violate the law”.
Commerce Minister Nadhim Zahawi told Kay Burley’s show that a “good deal” of funding has already been provided and there could be “more to come”.
He also warned that immediate action should be taken because in the first week of November when it is on the current route, there will be no beds in the intensive care unit at Greater Manchester.