OS X Yosemite installation error: File system repair failed

My #Macbook Air has been running fine until I decided to upgrade to OS X 10.10, Yosemite. Its downloaded fine and When it is installing I get the message: File system verify or repair failed. I have 2 options either to Restart or to repair disk. Restart will again take me on starting error that File system verify or repair failed. And when I clicked disk utility in order to repair the disk, But of course the Repair button is grayed out only I can verify. It won’t let me change to my Mac as the startup disk either. I’ve tried starting in safe mode. Target mode. Tried to zap the pram. Nothing will let me back into my hard drive. I only have 1 partition so it is not letting me to start up with same HD as start up and save disk cannot be same. I then tried to create an image on my external drive but this also fails with the message: Unable to create Macintosh HD.dmg. (Input/output error) I am stuck in this vicious cycle of restarting and the installation failing. I cannot escape the installation process. Is there a way to start my system in either old OS or to complete the installation