Boyd has been in great form for Rangers this season
Birmingham say they will not increase the wages rejected by Kris Boyd as Fulham and Sunderland consider joining the race to sign the Rangers striker.
Rangers had accepted an increased offer of nearly �4m for the 25-year-old.
But Blues manager Alex McLeish said: "We made an offer to Kris and his representative and they rejected it.
"We felt we made a very fair offer. But they were looking for money we just won't pay, so I think we have to call it a day at that."
A Birmingham source had previously said it was 75% certain that Boyd would be a Birmingham player by the end of the week.
But Boyd trained with his Ibrox team-mates on Thursday after deciding against travelling south following the breakdown of talks with his former Rangers manager's club.
McLeish said: "Whether it gets resurrected, I do not know, but I've got to move on and if something else drops on my desk and it appeals to me and I think it can transform my team and within the parameters of my budget I will look at that.
"The board have pushed the boat out for us to do the Kris Boyd deal.
"It's a lot of money for us in the Championship and they have shown their ambition, but it did not happen and we have to look elsewhere."
The promotion hopefuls are keen to bolster their forward line, with Garry O'Connor sidelined by injury and Quincy Owusu-Abeyie's loan period ending.
They were prepared to pay almost �4m for Boyd, who would have been handed a five-year contract.
But the failed bid appears to have ignited interest from other English clubs, with Fulham and Sunderland thought to be interested, who now know that Rangers are prepared to sell the former Scotland striker.
With no further talks planned with Birmingham, Boyd's future may still rest with the club he supported as a boy.
Boyd, who was signed for Rangers by McLeish, is the top scorer in the Scottish Premier League with 18 goals.
The Glasgow club sold Daniel Cousin to Hull City in the last transfer window and manager Walter Smith has since made no secret of the need to prune his squad further.
Fellow striker Jean-Claude Darcheville has now gone to Valenciennes. But, with summer signings Andrius Velicka and Kyle Lafferty have failed to make an impact, news of a willingness to sell Boyd has surprised many Rangers supporters.
Boyd has scored 91 goals since moving to Ibrox in January 2006, despite struggling to become a regular starter under McLeish's successors Paul Le Guen and Smith.
Cardiff City failed with a �2.5m bid for Boyd in the summer and the player recently revealed that, frustrated at being overlooked for key matches last season, he had considered leaving Ibrox.
Then, in October, the striker, who has scored seven goals in 15 international appearances, said he would not play for Scotland again under manager George Burley.
The player was upset after not being included for the World Cup qualifier with Norway, which ended in a 0-0 draw at Hampden.
But his form this season has been impressive and he has formed a productive partnership with Kenny Miller, with Smith making the former Scotland team-mates his regular first-choice pairing.
Boyd's previous club, cash-strapped Kilmarnock, would be due 20% of any future Boyd transfer fee.
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