The mum-of-five, who was in the bottom two on Saturday, is thought to be upset about her mentors song choices.
There is total breakdown in communication between the two girls, says a source.
She is desperate to win the competition but she feels she has no chance if Dannii keeps giving her the wrong tracks to perform.
It has been bubbling under for weeks, ever since Dannii gave her the Robyn track Every Heartbeat to sing which really didnt complement her amazing voice.
'But it was the final straw when she ended up in the bottom two. She demanded Dannii had to go.
Simon Cowell, 49, is even believed to have tried to act as a mediator to ease tensions between Rachel, 26, and Dannii, 37.
He does realise she can be a handful and that Dannii has a difficult time trying to handle that, the source tells the Daily Mirror.
'The way Dannii has dealt with Rachel has really put her mentoring skills under the spotlight.
A show spokesman declined to comment.