SILVERSTONE, England (AFP) - Motor racing's governing body the FIA said Friday it was disappointed, but not surprised after the Formula One Teams Association (FOTA) announced it would set up a rival championship next season.

FOTA's announcement late Thursday threw Formula One into disarray on the eve of this weekend's British Grand Prix after months of wrangling over the FIA's plans to introduce rule changes, most notably a budget cap, for next season in an attempt to revamp the sport.

"The FIA is disappointed but not surprised by FOTA?s inability to reach a compromise in the best interests of the sport," the FIA said in a statement.

"It is clear that elements within FOTA have sought this outcome throughout the prolonged period of negotiation and have not engaged in the discussions in good faith.

"The FIA cannot permit a financial arms race in the Championship nor can the FIA allow FOTA to dictate the rules of Formula One," added the FIA, which underlined that the entry deadline for 2010 entries would expire Friday evening with the team entry list to be announced Saturday.

The Geneva-based FOTA - who consist of McLaren-Mercedes, BMW Sauber, Renault, Toyota, Brawn GP, Ferrari, Red Bull and Toro Rosso - oppose FIA's plans to introduce rule changes and introduce a budget cap for next season.

Williams and Force India, however, have accepted the new framework, along with the three new teams, USF1, Campos and Manor.

In their statement FOTA said: "It has become clear that the stables cannot continue to make compromises on the fundamental values of the sport.

"They have refused to modify the conditions regarding their signing up to the 2010 world championship.

"The teams have no other alternative but to begin to prepare for a new championship which reflects the values of the competitors and their sponsors."

Renault's two-time world champion Fernando Alonso said he would have no compunction in racing in a breakaway series, the BBC quoting him Friday as saying unequivocably: "I will drive for another championship."

Formula One supremo Max Mosley insists that a voluntary 40 million pounds (48 million euro) budget cap would curtail the current "financial arms race".

In proposals he unveiled earlier in the week, Mosley suggested a 86 million pound budget cap for 2010, slashing that to 39 million from 2011.

Brawn GP chief executive Nick Fry told BBC Radio 5 Live. "It was a good discussion but obviously a very difficult one.

"We've negotiated with Max and Bernie at some length in good faith, and not quite got to where we want to be, so at the moment it looks like we'll be doing something different."

Fry hopes that a compromise can still be reached but he admitted it was up to the FIA to make the next move.

He said: "Really the ball is now in Max's court and he has to announce the participants in the championship for next year, which is due imminently, so we'll see what happens there. I do hope from our point of view that discussions continue."

Red Bull Racing team principal Christian Horner told the Press Association that FOTA saw no alternative to a breakaway series.

"The positions have hardened on both sides. The teams feel they have gone as far as they can, and the FIA feel they have gone as far as they can.

"So we've no alternative because if we can't race in Formula One under the current rules, and if you want to keep competing, then you've got to look at something else."