Reports on Wednesday suggested Shevchenko could return to Milan in what would initially be a season-long loan deal following a meeting between former club president Silvio Berlusconi and Chelsea owner Roman Abramovich in Sardinia last Thursday.

Rossoneri director Silvano Ramaccioni announced that a deal was close, while the Italian press claimed the deal would be finalised on Thursday or at the latest 24 hours later.

However, Galliani revealed on Thursday night that the proposed loan deal had fallen through.

"Negotiations for Shevchenko are at the moment frozen," he told Gazzetta dello Sport.

"Milan had wanted to take the player on loan with the right to buy him, but Chelsea said no because they wanted us to buy him outright.

"Therefore negotiations are through."

The news appears to signal the end of Milan's summer-long pursuit of a player who has endured two disappointing years at Stamford Bridge following a big-money move from the Italian giants in 2006.

The Ukraine striker remains a firm favourite at the San Siro, where he still stands as the club's second-most prolific goalscorer of all-time having scored 127 goals in 208 games during a seven-year career.