Real Madrid called off its signing of Independiente de Avellaneda's central defender Gabriel Milito on Monday because he has a knee injury.

Madrid's decision was announced following a two-hour meeting between sports director Jorge Valdano and Independiente officials at Madrid's Santiago Bernabeu Stadium.

"Having carried out the necessary medical examination and after rigorous tests, Real Madrid's medical staff consider that taking into account the intensity and frequency of the efforts demanded by Real Madrid, the maximum performance of the player over the next four seasons cannot be guaranteed," Madrid said in a statement on its Web site.

"Very sadly, from the sporting and personal point of view, Real Madrid has called off the transfer of Gabriel Milito, whom we wish all the best for the future," the club added.

Milito's reported euro 3.5 million (US $4.5 million) move was in doubt since last Friday when Madrid said he had not fully recovered from the cruciate ligament injury he sustained in March 2001. The defender was sidelined for nine months and then missed another four months after an operation.

Madrid said it had offered to take the Argentine international for a season on loan but "no agreement was reached."

Spanish news agency Efe reported that the Argentine club's technical director Fernando Gonzalez was annoyed as he left the meeting.

"There is no solution. The most disappointed of all is the player," the agency quoted Gonzalez as saying.

Gonzalez said that the Independiente officials would hold a news conference at a Madrid hotel at 1900 GMT.

Independiente president Andres Ducatenzeiler anticipated the result of the meeting and also criticized the Spanish club earlier Monday.

Ducatenzeiler said that Milito was "in excellent shape" and blamed the decision on "an internal conflict between those who want and don't want the player to play for Madrid."

"If it had wanted to contract him it would have done so already. Madrid has been delaying the announcement to see how it can get away with it," he added.

Milito had been earmarked as a replacement for veteran captain Fernando Hierro, who left Madrid last month after his contract was not renewed.

The decision not to proceed with the transfer leaves Madrid short of a central defender, three days before it embarks on its Far East tour.

The Spanish titlist, under its new coach Carlos Quieroz and star signing David Beckham in its ranks, faces the Dragon Team in Beijing on Aug. 2.

Three days later, Madrid meets FC Tokyo in Tokyo, and on Aug. 8 it plays China in Hong Kong. Its final game is against Malaysia on Aug. 10 in Kuala Lumpur.

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