Bayern Munich have withdrawn the offer of a contract extension for Philipp Lahm.
The German defender opened talks with general manager Uli Hoeness earlier this month and stated that he was willing to remain with the club.
However, Lahm, who has one season remaining on his current deal at the Allianz Arena, has not been able to come to an agreement with his club bosses.
"Talks between Bayern and Philipp Lahm over the extension of his contract which expires on June 30, 2009 have been inconclusive," the club said.
"As a result, Bayern have withdrawn the offer of a contract extension."
Lahm has now admitted that he could leave Bayern and set out for a new challenge in a different country.
"I've played for two years with Stuttgart, I'm finishing my third year at Bayern, the top German club, so the logical progression is to go abroad," he told Stern.
Lahm added that one of the reasons for his decision was that he doubted Bayern could win the UEFA Champions League in 2009.
"There are in Europe a handful of clubs who have a financial power superior to that of Bayern," he explained.
"Their teams play with more rhythm and assurance than Bayern."