The Icelandic manager has previously worked with the big Scot during his own spell at Stoke and having had three bids for the powerful forward rejected, Thordarson is ready to turn his sights on alternative targets.
Barnsley are thought to have offered a final bid of around £50,000, but with Stoke seemingly reluctant to sell, the deal does now seem unlikely.
Iwelumo, out of contract in the summer, is entitled to move on a Bosman in the summer and is also rumored to be interesting Brighton, Sheffield Wednesday, Northampton and Walsall.
The Yorkshire club could now focus their attention on trying to lure former Bristol Rovers striker Jamie Cureton to Oakwell.
Cureton is available for a £50,000 fee and has already attracted interest from Sunderland, QPR and former club Reading.
Earlier this week, Barnsley had a bid for Grimsby's Michael Boulding rejected. The former tennis professional is entitled to speak to any club that bids above £45,000 and could be another alternative for The Tykes.
