Kilo's group received an offer of only five seats - instead of the more than 20 it had been looking for - after a session in Turkey that stretched nearly to dawn, coalition sources said.
The move left the Coalition controlled by a faction loyal to Qatari-backed Secretary-General Mustafa al-Sabbagh, and a bloc largely influenced by the Muslim Brotherhood. That group led resistance to the rule of Assad's late father in the 1980s, when thousands of its members were tortured and executed.
European Union foreign ministers have agreed not to renew the union's arms embargo on the Syrian opposition, due to expire on Saturday.But there was no immediate decision to send arms to Syrian rebels and all other sanctions remained in force, the EU foreign policy chief said.
The decision came after lengthy talks among divided ministers in Brussels.
The failure to broaden the coalition, in which Qatar and a bloc largely influenced by the Muslim Brotherhood has been playing the driving role, could undermine Saudi Arabian support for the revolt and raise the specter of a rivalry among Gulf powers that could further weaken the opposition.
Its Western backers have pressured the Coalition to resolve its divisions and expand to include more liberals to counter domination by Islamists. The plan also had support from Saudi Arabia, which had been preparing to assume a bigger role in coalition politics and has been uneasy about the rise of Qatar's influence, coalition insiders said.
Its apparent failure to do so came hours before the European Union was scheduled at a meeting in Brussels to discuss lifting an arms embargo that could allow weapons to reach rebel fighters in Syria seeking to oust President Bashar al-Assad.
With Lebanese Shi'ite guerrillas from Iranian-backed Hezbollah now openly fighting alongside government troops in Syria, Saudi Arabia is keen to play a greater role in backing the Sunni-led opposition, opposition sources have said.
Significant expansion of the 60-member Coalition would have diluted the influence of Qatar, the other main Arab player backing the revolt against Assad.
Coalition members who had campaigned for an organizational shake-up said the feeble offer to Kilo's bloc was an affront to Riyadh and would make Saudi Arabia balk at backing the opposition more forcefully.
"The only time the Saudis ask for something substantive from the opposition we turn them down," a coalition source said.
"Saudi Arabia before this meeting was on the verge of throwing its weight behind the revolt. It would have made sense for Qatar to take a role in line with its size and let Saudi Arabia take a lead role. Sabbagh, and apparently Qatar, got their way, but at what expense?"