FAS staff refusing to issue certificates to trainees completing agency courses have been warned they face disciplinary action if they continue their action.
The embargo, being taken in support of a pay claim, has meant thousands of FAS "graduates" are unable to use their new skills to look for jobs.
Last week, 1,650 SIPTU members at the State training agency voted narrowly to reject a pay deal under the Programme for Competitiveness and Work that would have meant increases of 7 to 27 per cent.
FAS director general, Mr John Lynch, has written to all 075 employees telling them that, while management is still prepared to engage in pay talks, it will not tolerate a continuation of the embargo and related industrial action.
Tomorrow, SIPTU will ballot members on industrial action in the event of staff suspensions for enforcing the certification embargo or other action, such as refusing to monitor apprenticeship schemes.
The result of the ballot will be known next Monday.
SIPTU is taking the action in order to protect members, says branch secretary, Mr Paddy Trehy.
The ballot will be for all forms of industrial action, up to and including a full scale strike.
FAS trains about 16,000 people a year. It also provides essential support services for the Community Employment programme, which provides work for another 40,000.
These would all be affected should the dispute escalate, SIPTU says.
In his letter, Mr Lynch said the limited industrial action undertaken so far was leading trainees, job seekers and employers to question the value of FAS services.
"It has always been management's objective to conclude an amicable agreement," he added. But "the absence of industrial peace makes any further discussion impossible".
He urged a resumption of normal working so talks could go ahead and said "FAS cannot continue to live with a situation where our clients are being deprived of services by unnecessary industrial action."
FAS is involved in an overall review of training policy for a Government White Paper, due to be completed in the autumn.
The employers' confederation, IBEC, wants the sort of training schemes affected by the embargo to be hived off from FAS, which would then be left funding and overseeing social employment schemes.