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"I received a phone call from Inter and they have decided that they no longer wish to sell the player," said Bruce.
"It's a setback but I have other targets in mind and I will continue to work hard to bring quality players into the squad," Bruce told the clubs official website.
Meanwhile, Bruce's also seems set to miss out on Panathinaikos forward Emmanuel Olisadebe who would prefer a move to Chelsea or Juventus, according to his agent.
Antonio Caliendo has now revealed there is interest from various other clubs and he believes a move to Italy may be a better option.
"I have at least one better offer than the one from Birmingham," said Caliendo.