David Villa's agent claims Valencia are no longer willing to discuss the potential sale of his client.
The Spain international had been widely tipped to join Florentino Perez's revolution at Real Madrid, with both club and player expressing a willingness to do business.
An initial approach from Real fell through last week, but the capital giants were expected to reignite their interest over the coming weeks.
With Valencia currently struggling financially, it was regarded as inevitable that they would be forced to part with at least one of their more saleable assets.
Villa was expected to be the player sacrificed, but the striker's representative now claims that Los Che have decided against verifying a departure for the 27-year-old.
"Valencia have changed their minds and they are telling us they don't want to sell the player, as everyone knows, having talked with three or four top clubs," Jose Luis Tamargo was quoted as saying in the Spanish media.
"They have put us through a situation that is, sadly, very unpleasant because this is no good for anyone."
Villa, who is currently away on international duty at the Confederations Cup, has also been strongly linked with Chelsea and Barcelona.