We broke the story ... Santa Monica and L.A. City prosecutors had a noon meeting via telephone with Lindsay's lawyer, Mark Heller.
Sources connected with Lindsay tell TMZ ... prosecutors insisted Lindsay accept a significant amount of time in a residential rehab facility, but Heller wasn't having it. We're told prosecutors bent a little and offered somewhere around 30 days rather than the 60 they initially wanted -- still Heller didn't accept.
We're told Heller and prosecutors have not given up, and one source connected with the talks tells TMZ, "Negotiations are ongoing."
BUT ... sources say Heller and Lindsay are not in lockstep -- he's willing to accept a plea that involves counseling and possibly some sort of rehab, but Lindsay says she's not accepting any of it because to her it sounds like "punishment for something I didn't do."
Bottom line ... prosecutors aren't worried if they can't strike a deal -- we're told they're more than willing to go to trial March 18.
Your move, LiLo.