Gareth Barry - a target for Liverpool throughout the summer - is to remain with Aston Villa, the club has announced.
The England midfielder had set his heart on making the move to Anfield and linking up with his close friend Steven Gerrard in the centre of the park. But Villa have announced the 27-year-old will be remaining after Liverpool failed to reach a deadline to meet their £18million valuation of the player.
Villa said in a statement: "This evening, Aston Villa can announce that Gareth Barry will be staying with the club following the interest from Liverpool over recent months.
"During discussions in the past few days, a final deadline to conclude this episode was set that all parties were aware of and agreed to. This deadline has now passed and so Gareth will remain with Villa."
Barry was desperate to experience playing Champions League football with the Reds after a decade at Villa.
Now O'Neill will hope the player will buckle down and attempt to achieve that dream at Villa, who finished sixth in the Barclays Premier League last season.
Liverpool manager Rafael Benitez made it clear in May that Barry was one of his prime transfer targets for the 2008-09 campaign.
O'Neill was upset at him making details of his interest public and a war of words raged between the duo for much of the early part of the summer.
Liverpool made four separate bids to sign Barry but none of them matched O'Neill's valuation of the player. He made it clear a couple of weeks ago that the current situation could not continue indefinitely as he made his own plans for the new campaign not knowing whether or not Barry would be part of them.
Now O'Neill appears to have taken the situation by the scruff of the neck after Liverpool were unable to conclude the deal by the deadline agreed by all parties.
There has been constant speculation that Benitez, who this week signed Tottenham striker Robbie Keane for £20million, would have to sell to finance the Barry deal.
Benitez said: "We knew that we could only spend money by selling players and we have been doing this (for Robbie Keane).
"We are still trying to sign the players that we need and if we need to sell someone now, OK, we will do so. If we can do it (the Barry deal) before the end of the transfer window, we will continue to try."