The Football Association are to hold talks with Manchester City over the proposed appointment of City manager Stuart Pearce as England Under-21 boss.
Pearce was linked to the job for the senior England team in 2006
Pearce said on Sunday he would like to succeed Peter Taylor in the role, if City reached an agreement with the FA.
But in a statement, the club said it had not given permission for Pearce to be released for England duty.
Both Manchester City and the FA have said they hope the matter will be resolved within the next few days.
Newcastle United have given the green light for their coach Nigel Pearson to work as assistant coach to whoever is in charge of the Under-21s.
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Speaking on Sunday, Pearce said he was confident he would be able to combine the role of coaching the Under-21s with managing City.
About the club's response to him taking the job, he said: "Hopefully they can finalise one or two things and I do not see any reason why that shouldn't be the case."
Pearce spoke to the FA last week but encountered resistance from City, who felt he should focus on club matters.
There is also a sticking point over how soon Pearce would take over.
Reports on Monday said Pearce had made himself available for two friendlies - against Spain on 6 February and another yet to be confirmed - and this summer's European Under-21 Championship in Holland.
But it has also been suggested that the City board did not want him to take over before the summer.
In Manchester City's official statement, released on their official website, the club said: "We recognise Stuart's patriotism and enthusiasm to assist the Football Association and Manchester City in turn understands the FA's desire to have him contributing to the Under-21s European Championship campaign.
"We will remain in dialogue with the FA and hope to reach a solution suitable to this club in the next few days."
The FA confirmed the situation in their own statement.
It read: "The FA will continue speaking with Manchester City over the next few days with regard to reaching an appropriate agreement with Stuart Pearce to manage England's Under-21 team."
Pearce, who won 78 England caps, was tipped as a potential successor to the then boss of the senior England team, Sven-Goran Eriksson, in 2006 when City were going strong in the Premiership.
But their form tailed off as speculation continued before Steve McClaren was given the job.
On stepping down, Crystal Palace boss Taylor said: "Anybody coming in would have to commit a lot to the job."
But Pearce is confident he can handle the workload.
He said: "The club have been extremely open-minded - but with concern about time constraints on my job.
"But I can guarantee them that I will be working absolutely solidly whether I take the Under-21 job or not.
"They know that and they know what sort of man I am and I think it would be of massive benefit to this football club if I were involved in that role as well as doing the manager's job here - the benefits far outweigh any downside.
"They have asked me if I want the job and I said yes I would. It would be a great honour to serve my country in that respect."