It had been reported that the Aussies, who have been looking for a London base, were set to pen a deal that would see them playing their international fixtures at the Madejski Stadium, starting with a game against Argentina on March 30th.
However, a top Soccer Australia official has admitted a deal is beginning to look unlikely. The Australians must seal a deal within the next 48 hours or they will be forced to cancel the proposed game with Argentina.
"We're talking to them but we've got huge logistical problems and the odds are less than 50% that it can take place," said Soccer Australia Chief Executive Stefan Kamasz.
"And we have yet to secure an underwriter for the match so time is against us.
"Reading is not locked in and we won't be making an announcement until the Soccer Australia board makes a decision."
The Australians have been forced to cancel friendly fixtures in the past against Portugal and Serbia and Montenegro and may have to do so again if a deal cannot be sorted.
Whilst Reading Football Club are still hopeful of agreeing a deal it is possible that Soccer Australia could turn to Watford's Vicarage Road or QPR's Loftus Road if they cannot sort out a deal.