Schumacher, now 40, is a seven-time world Formula 1 champion
Seven-time Formula 1 champion Michael Schumacher has abandoned his comeback with Ferrari because of a neck injury.
The 40-year-old, who retired at the end of 2006, was set to deputise for the injured Felipe Massa at the European Grand Prix in Valencia on 23 August.
"Unfortunately we did not manage to get a grip on the pain in the neck which occurred after the private F1-day in Mugello," Schumacher told his website.
Veteran Ferrari test driver Luca Badoer will now stand in for Massa.
Schumacher aggravated a neck injury, suffered in a bike accident in February, whilst trying out a 2007 F1 car as he set about making his comeback.
But the 40-year-old German revealed: "The consequences of the injuries caused by the bike accident, fractures in the area of head and neck, unfortunately have turned out to be still too severe.
Since I was a child I've always wanted to race for Ferrari and now I've got the possibility to make this desire come true
"That is why my neck cannot stand the extreme stresses caused by F1 yet. These are the clear results of the examinations we did on the course of the past two weeks and the final examination on Monday afternoon.
"As there were no improvements after the day in Mugello, I decided at short notice on Sunday to do that thorough examination on Monday."
A strong neck is crucial to F1 drivers who face punishing G-forces, and Schumacher contacted Ferrari president Luca di Montezemolo and team boss Stefano Domenicali on Monday evening to tell them he had lost his fitness battle.
"I'm very sorry about the problem that will stop Michael returning to racing," said Montezemolo.
"His return would surely have done Formula 1 good and I'm certain we'd have seen him fighting for victory again.
"I want to thank him in the name of Ferrari and all the fans for the attachment to the team he has shown in these circumstances."
With little time to find a replacement for Massa, who is recovering at home in Brazil, from the serious head injuries he suffered during qualifying for the Hungarian GP, Ferrari have named Badoer as Kimi Raikkonen's team-mate in Valencia.
Report - Schumacher cancels comeback
After a decade as a test driver for the team the 38-year-old Italian is himself returning to racing after a long absence - and is confident that he will not let Ferrari down.
"I have prepared myself to be ready under any circumstances just as I've been doing in previous years," Badoer told the Ferrari website.
"I've been in this business for quite a while. After Felipe's accident (in Hungary last month) I intensified my programme and I'm sure I won't have any problems."
But Badoer, who tuned his racing abilities by karting with Schumacher in Italy last week, does not bring the German's level of experience and abilities.
He started 49 races for Scuderia Italia, Minardi and Forti between 1993 and 1999 without scoring a point.
His last competitive drive saw him qualify last and retire early from the 1999 Japanese Grand Prix.
Badoer also holds the dubious record for the most GP starts without collecting a single point.
"Since I was a child I've always wanted to race for Ferrari and now I've got the possibility to make this desire come true," added Badoer.
"I'm really sorry for Michael because I know how much he wanted to return. I'm saying that as his friend and his fan.
"I know he'll always be ready to give me advice."
Schumacher won five world championships with Ferrari and had been working as a consultant for the Italian team before his decision to come out of retirement to stand in for Massa.
Schumacher decision a 'huge blow' - Legard
The German, who claimed his other two drivers' crowns with Benetton, has started 249 grands prix, winning a record 91 of them.
His return was eagerly anticipated but, despite trying everything 'medically or therapeutically' possible, he has had to admit defeat.
"I am disappointed to the core," he said. "I am awfully sorry for the guys of Ferrari and for all the fans which crossed fingers for me.
"I can only repeat that I tried everything that was within my power. All I can do now is to keep my fingers crossed for the whole team for the coming races."
While the rest of the F1 drivers were enjoying their mid-season break, Schumacher had embarked on a rigorous training regime, resulting in him losing more than six pounds in weight before calling off his return.
But former F1 driver Johnny Herbert said that even an intensive period of preparation may not have been enough for Schumacher to cope with the 2009 specification cars.
"The cars are so awesomely quick and I think his body would have struggled a bit more than he thought," Herbert told BBC Sport.
"If he had kept going up until the age of 40 and then he had retired he would have got straight back into it.
"The interesting factor would have been to have seen what speeds Michael could have reached. It may have been the speed we all know from his successful years but I think it would have been more difficult than that because things have moved on."
Radio 5 live commentator David Croft added: "It's hugely disappointing.
"The F1 world was very much looking forward to seeing Michael Schumacher locking horns with Lewis Hamilton, Jenson Button, Kimi Raikkonen and Fernando Alonso.
"But it's hardly surprising. The g-forces that your neck muscles particularly are exposed to in a modern-day F1 car can take their toll and give you severe punishment during the course of a race.
"If you are not 100% fit, there's no way you can think about driving one of these cars.
"I don't expect Badoer to be in the points or troubling the leaders when he gets to Valencia next week. "
Schumacher's last F1 in was at the Chinese Grand Prix in 2006
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