Wembley chiefs prevent Italian going to the San Siro.
The Football Association had to intervene to make sure manager Fabio Capello rejected an approach from Inter Milan to become their new boss.
The San Siro giants president Massimo Moratti wanted the Italian to replace Leonardo following his departure to Paris St Germain.
The Gazzetta dello Sport reports Inter had a slight chance to hire the England coach but the FA made sure Capello would not take the job.
But Capello’s contract with the Three Lions expires after next year’s European Championship and the Italian has always insisted he would see out his deal.
Capello’s son Pierfilippo, who also acts as his lawyer and agent, confirmed Inter had held talks about hiring the former AC Milan boss, but he will stay on as England boss.
Asked if it was true there had been talks with Inter, Pierfilippo Capello told The Sun: “Yes. But Fabio will remain with the FA.”
Inter are likely to turn to former Genoa coach Gian Piero Gasperini or to Turkey coach Guus Hiddink after failing in their efforts with Capello.