Liverpool's £53million move for Nabil Fekir collapsed on Saturday night amidst reports that Lyon pulled out of the deal when the Reds tried to get the French international on the cheap after seeing the results of his medical.
A knee problem was hampering Jurgen Klopp's bid to get the transfer sealed before the World Cup.
And the deal now looks dead after Lyon issued a statement confirming they had pulled out of talks with Liverpool.
The statement read: “Olympique Lyonnais informs that negotiations with Liverpool and Nabil Fekir for the transfer of the Lyon captain have not been successful and Lyon have decided to bring an end to these negotiations.”
Fekir suffered a serious knee injury playing for France three years ago.
But suggestions that he had failed the medical seemed unfounded when French Football Federation president Noel Le Graet claimed the player had passed the necessary physical tests.
The terms of Fekir's five-year contract were also agreed, but it is believed that Liverpool's attempt to renegotiate the transfer fee at the 11th hour has prompted Lyon to kill the midfielder's Kop dream.
Liverpool refused to comment on why the transfer has collapsed.
Fekir, 24, who is in France's World Cup squad, will be devastated after making it clear he wanted to move to Anfield.