A deal had been agreed to take Davenport, who was sold by City to Spurs for £1.1m to the Reebok Stadium from his current West Ham United club.
However, Gary Megson has now signed defender Sebastien Puygrenier from Zenith St Petersburg subject to international clearance and changed his mind.
"I know we have messed Callum and West Ham about," said Megson to Sky Sports News. "But I can only apologise."