Monte Carlo  - A three-hour meeting between the sports' governing body (FIA) and the association of Formula One teams (FOTA) in Monte Carlo on Friday failed to bring an end to the controversy raging around the budget cap.

FIA president Max Mosley a few weeks ago introduced a controversial budget cap of 45 million euro (61 million dollars).

The cap is not mandatory, but teams which keep to it will have all technical freedom in areas such as engines and aerodynamics, while teams which spend more money face restrictions.

After Friday's meeting Mosley said that small steps forward had been made.

FOTA had two meetings on Friday to discuss the issue and Ferrari, who on Wednesday failed in their bid to get an urgent interdict in a Paris court, stressed the need for unity amongst the teams.

"We stand together. We have found a very constructive, but clear position," Ferrari boss Luca di Montezemolo said, adding that the later meeting with FIA had also been "constructive."

Formula One supremo Bernie Ecclestone took part in the FOTA meeting for a while, but left early. He had earlier said that they would consider legal steps against Ferrari should they withdraw from the Grand Prix circuit next year.

"We have always respected our contracts. All teams that have contracts with us would expect the same. And we expect the same from Ferrari," he is quoted in the Times.

"They say they could go. We hope they respect their contract," the 78-year-old said.

Ferrari is said to have a valid contract until 2012.

The teams have until May 29 to decide if they want to apply to race next season and several teams have already indicated that they are not willing to compete if the rule is not scrapped.

Apart from Ferrari, Toyota, Renault, BMW-Sauber and Red Bull have said they would consider withdrawing from Formula One if the rule is not scrapped. (dpa)