The star agreed a "modest" pay increase with the Italians after being on the verge of a move.

AC Milan Vice-President Adriano Galliani had accepted Manchester United's £9m offer for the 22-year-old striker.

The player stalled over the move, saying he would have preferred to go to a London club.

Kluivert was reportedly demanding a £500,000 signing-on fee and £40,000 per week, which proved to be a stumbling block in a move to Arsenal.

The latest rejection from a top class international striker is a major blow to Alex Ferguson in his quest for European glory.

United were hoping to sign him in time for Sunday's Charity Shield clash with Arsenal.