A report from Fiji says members of the Great Council of Chiefs rejected President Iloilo's nomination of Ratu Epeli Nailatikau for the vice presidency based on legal advice.
The president nominated Ratu Epeli because of his excellent record of public service as a former Speaker of parliament, diplomat and military commander.
But the Fiji Times quotes a source within the meeting as saying two of the three traditional Fijian confederacies rejected it because Ratu Epeli was considered to be part of an illegal administration and thus could not be nominated for the position.
The source said the decision was based on advice from a New Zealand lawyer who said the interim administration was illegal and whatever was done within that context was illegal.
The interim minister for Fijian affairs, Ratu Epeli Ganilau, said he was shocked and disappointed by the rejection of the president's nomination.
Ratu Epeli said the conversation during the meeting was centered on the chiefs still recognising the deposed government because they kept referring to it for their decision on the issue.
The Fijian affairs minister said the people should not dwell in the past because of what had happened and it was time to move the country forward.
The deposed prime minister, Laisenia Qarase, said from exile in his home village that the Great Council of Chiefs had made a wise and independent decision after careful consideration.