"The board wanted to support the manager by providing the finances to fund the acquisition of Sean Gregan," Leeds chief operating officer Shaun Harvey told his club's official website.
"However, Leeds United are not prepared to pay more for a player than we believe is his value, both in the market place and to Leeds United.
"Kevin's search for players will continue. It is imperative that the players brought in are the right ones, not the short term solutions which the temporary transfer market provides for."