Blues had agreed a £6million deal with Spurs before the weekend for 30-year-old Keane, who is desperate to resurrect his career away from White Hart Lane. But McLeish had stressed there was still plenty of work to be done before any potential deal could be completed.

Now City have admitted they are no longer interested in signing the Republic of Ireland captain as it "would not be in the best financial interests of the club."

McLeish is still waiting to find out if Rangers striker Kenny Miller will move to St Andrew's after agreeing a £1.1million deal.

But he has already held discussions with Birmingham's acting chairman Peter Pannu over possible new targets to pursue.

Pannu told bcfc.com: "I met with Alex McLeish and chief scout Paul Montgomery today to discuss some new targets - names that we will not be mentioning at this moment in time - as we have decided that the signing of Keane would not be in the best financial interests of the club.

"Everyone knows he is a tremendous player but, having considered the overall package (one which certainly wasn't unfair on the part of his representatives to ask for given his talent and experience), Keane's age and the length of contract we felt that financially he wasn't the best option available.

"This is unfortunate because Keane is a class act but supporters can rest assured we are considering other options and will pursue them where financially viable."

The news will be disappointing for City's on-loan Tottenham winger, David Bentley, who believed Keane would be a "great addition" before the deal fell through.

McLeish has continually cited a lack of firepower as the main reason for City being in a relegation battle after finishing ninth in the Barclays Premier League last season.

He is aware of the need for that weakness to be rectified before the end of the campaign, with midfielder Craig Gardner their leading marksman with just five goals.

Miller, who is out of contract in the summer, is also considering an offer from Fiorentina.