Scotland Yard have been refused permission by Portuguese authorities to search the homes of the key suspects who worked at the Ocean Complex in Praia De Luz at the time of Madeleine McCann's disappearance.
The three former staff members, who are thought to have carried out break-ins at the resort, are considered 'people of interest' in the inquiry.
Analysis of mobile phone data suggests the men were close to the scene of her abduction and were in contact in the hours that followed.
However, as none of the suspects is British, the Metropolitan Police do not have jurisdiction to make arrests.
The news comes as detectives from Scotland Yard have arrived in Portugal to oversee the excavation of a number of sites surrounding the holiday resort as part of the investigation into the disappearance.
Assistant Commissioner Mark Rowley revealed tension between British and Portuguese Police relating to preferred practice over the disclosure of information to the media.
In an open letter dated today, the senior police officer said Portugal's Policia Judiciara have threatened to halt the work if information relating to the investigation is made public.
"The advice I am receiving from Portugal is that their approach is very different," he said.
"If we provide any briefings or information on the work they are undertaking on our behalf activity will cease until that problem dissipates. We will not be able to provide any information concerning the activity because ultimately it could mean the work stops.
"We respect the Portuguese position as we would expect them to respect our position if we were carrying out work on their behalf in the UK," he added.
Deputy assistant commissioner Martin Hewitt added: "We have been issuing a number of letters of request. Some of the requests are not being acceded to. It's not fatal to what we are going to do - it's their judicial authority.
"That's causing us frustration because we know what we want to do and we are ready to go with that. But the process is the process," he added.
Appeals on BBC's Crimewatch led to new information and officers now plan to dig up key areas of Praia da Luz, just yards from where the toddler vanished.
The Mail told today how a large wasteland yards from the complex will be dug up, as well as an area beside the beach and roads by the church in Praia da Luz where Gerry and Kate McCann prayed for the safe return of their daughter.
A key area to be searched is an overgrown wasteland, which was bought by Irish developers before being abandoned because of a property crisis in the area.
Portuguese detectives will use radar equipment and mechanical diggers to excavate the site, while officers on foot will conduct fingertip searches.
Kate McCann told Sky News last week, on the seventh anniversary of her daughter's disappearance that she needed to know what happened - even if it was the "worst-case scenario".
"Madeleine's either alive or she isn't and we can't change that."
Three-year-old Madeleine McCann disappeared on May 3, 2007 after she was taken from the holiday apartment in Praia Da Luz.