Boyd looked set for a £3million-plus move to the Coca-Cola Championship club but McLeish revealed today that he and the player were "miles apart" regarding the 25-year-old's wage demands.

Ibrox boss Walter Smith insisted earlier he would welcome his top scorer back if the move collapsed and that may now be on the cards.

McLeish told Birmingham's official website, www.bcfc.com: "The situation is that we had some talks with Kris and his advisers yesterday and we were miles apart.

"And, as a result of that, the talks were concluded and there wasn't any agreement in place.

"We felt we had made a good offer and they're entitled to ask what they want and we respect that, but that's it dead as far as I'm concerned.

"I've got to move on and it remains to be seen if it can be resurrected. At the moment it's unlikely."

With the January transfer window still in its infancy, there is plenty of time for the parties to come to an agreement but McLeish warned he would not wait around for Boyd to back down.

He said: "If somebody comes across my desk this afternoon, a player that I believe can make a difference to the team and it's within the parameters of the budgets, then I've got to move on.

"I have to do the best for Birmingham and for the Birmingham supporters."

McLeish is a long-time admirer of the prolific Boyd, who he signed from Kilmarnock while Rangers manager more than three years ago.

The forward has gone on to net 91 goals in 96 starts for the Glasgow giants, including 20 already this season.

But Birmingham's board have refused to compromise their wage structure to land the player.

McLeish added: "I go along with the board because I felt it was a very fair offer and so there's a little bit of an impasse there."

Boyd, the Clydesdale Bank Premier League's top scorer this season, arrived for training at Murray Park this morning, with his advisers still attempting to thrash out personal terms with Birmingham.

Smith confirmed a fee had been agreed for the striker - reportedly £3.75million-£4million - but insisted if the deal collapsed completely, there was every chance he could stay.

Smith told his club's official website www.rangers.co.uk: "There is that possibility. If they can't agree on the personal aspects, that is exactly what will happen.

"Currently, the clubs have agreed a fee and the player's representatives are in discussions with Birmingham with regards to personal terms of the contract - we await a decision from both of them as to what will happen."

Sir David Murray's decision to sanction the sale of Boyd has sparked fears of a fire sale at Ibrox but Smith echoed his chairman's assertion that would not be the case.

"I think that chairman has made it quite clear that if we sold a player, Kris Boyd or any other, there would be no need for us to sell anybody else," said Smith, who recently revealed he would be prepared to lose up to 10 first-team players from his squad.

"That was clear in the articles he did this morning so if the deal does go through, then there would be no necessity for us to sell any other player."

But should Boyd stay, it appears the likes of captain Barry Ferguson, defender Madjid Bougherra and goalkeeper Allan McGregor would then be made available for transfer.

All three have been linked with Barclays Premier league teams in the north-east of England and Murray has admitted any one of the club's players could be sold as he looks to slash a wage bill of £5million-£7million.

That has eaten into Rangers' coffers following their failure to reach the Champions League group phase.

There was no indication Boyd's camp was prepared to budge on personal terms, with his agent, Mark Donaghy, telling STV: "The ball is in Birmingham City's court."