A much-touted plan to bring Ottawa together with First Nations to overhaul native education has fallen apart.

National Chief Shawn Atleo emerged Wednesday from three days of meetings with First Nations leaders and educators saying they had agreed to reject the federal government's approach.

"The instructions that you have afforded here by this resolution are very clear and that is to reject, to say No, to federal legislation," Atleo said.

Ottawa wanted to craft legislation that would set up school-board type arrangements that would give native governments more control over their education.

But chiefs said the federal decision-making was taking place behind closed doors, and leading to a one-size-fits-all law that would not work for reserves whose rights are defined by treaties.

"A prescriptive, regulated system is not the solution in our communities," said Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs.

"We're not going to let Canada make everybody think that the solution to low graduation levels is resolved by a legislated solution."

High school graduation rates in some reserves are well below 50 per cent.

Earlier this year, Ottawa and the Assembly of First Nations said they would work on a joint action plan that would lead to a collaborative crafting of legislation by 2014.

The plan was the centrepiece of a summit with Prime Minister Stephen Harper in January and formed the basis for $275 million in new funding in the spring budget. It has been a top priority for both Harper and Atleo for several years.

The decision of the chiefs on Wednesday to walk away from that process is a major blow to the relatively peaceful Crown-First Nation relationship of the past few years.

In a statement, Aboriginal Affairs Minister John Duncan asked the chiefs to reconsider.

"I am...disappointed that given our commitment to work together, and without having engaged in any formal discussions or consultations with the government, the chiefs' assembly on education has rejected the development of a First Nation Education Act," he said.

But Nepinak says the status quo is not an option either. Rather, he will be pushing chiefs to better define what treaty rights to education are, so that Ottawa can negotiate with them on their terms.

"We owe it to one another as First Nations to sit down and articulate what the treaty right to education is meant to be...so that Canada has an opportunity to meet us somewhere," he said.

Rejection of the education plan has been brewing for months. Major groups of First Nations communities refused to get involved in a task force that earlier this year made recommendations on native education reforms.

Atleo's willingness to co-operate with the government was a major criticism against him during his recent campaign for re-election.

And many chiefs say they are upset that they were not properly consulted on the education plan.

The last straw, said Nepinak, was this week, when Duncan issued a news release in the middle of the First Nations meetings, announcing he would set up public-private partnerships to build some new schools and laying out a process for funding that would help First Nations prepare for legislation.

Duncan also said funding for native schools was already on par with off-reserve schools across the country, signalling to some First Nations that their pleas for more funding were not being heard and that Ottawa was set on its own path.

"Repeated unilateral approaches by government have created a great deal of mistrust, and while chiefs welcome announcements to build schools, this approach is not adequate," Atleo said in a statement.

"This pattern cannot continue. It does not meet the needs or address the overwhelming disparity between First Nations and other Canadians."

Atleo and Duncan met on the issue just last week.