French Economy Minister Arnaud Montebourg said neither the General Electric offer or the joint Siemens-Mitsubishi Heavy Industries offer for Alstom power assets had met the government's demands, but that France would work with GE on defining a new proposal.
"The Siemens-MHI offer was serious but the government has made up its mind," Montebourg told a news conference.
The French state would purchase a 20 percent stake in Alstom from main shareholder Bouygues at market price, he said, adding that it was vital that key decision-making centers of the group would remain in France.
Read MoreGE submits revised Alstom proposal
On Thursday, GE presented a revised proposal for Alstom's power and grid business to the French government. The revisions, which included three GE-Alstom joint ventures, were in response to a demand from French President Francois Hollande that GE and German rival Siemens improve their competing offers before his government would approve any sale.
Siemens and Japan's Mitsubishi Heavy Industries submitted an earlier proposal for a $19.3 billion sale that would have Siemens winning Alstom's gas turbine division and Mitsubishi gaining a minority stake in the company.
Alstom's board is expected to vote on the proposals before its June 23 deadline.
—By Reuters with CNBC staff