Barlow stormed off stage after Walsh changed his mind about saving Carolynne Poole, instead opting to keep Rylan Clark, who went on to stay in the competition.
The X Factor judges and producers attended a crisis meeting last night, but the pair refused to speak all evening, The Sun reports.
"Everyone was hoping for peace talks between Gary and Louis but they sat at opposite ends of the table and didn't speak all night," a source said.
X Factor executive producer Richard Holloway was forced to deny claims that he fixed the vote after he was spotted speaking to Walsh while the show was live on air.
Barlow has since reportedly vowed to quit The X Factor if the "pantomime" continues.
Watch Carolynne Poole talk about her controversial exit from The X Factor below: