Manchester City made a hasty retreat from their world record attempt to sign Kaka last night when the Brazil international informed Milan he had no interest in swapping San Siro for Eastlands. City had proposed a £91m deal to the Italian club and a weekly wage of £500,000 for the former World Footballer of the Year. But, appearing at a window of his flat where about 2,000 Milan fans had gathered and pointing to his heart, Kaka confirmed his primary motivation is not Sheikh Mansour's money.

The Milan owner and Italian prime minister, Silvio Berlusconi, who was rumoured to be content to accept a package that would have erased his club's debts and enabled a rebuilding programme to commence, broadcast the 24-year-old's decision to his relieved supporters last night. City were left to announce they had "terminated discussions" with Milan over the proposed deal, having been left in no doubt the transfer could not take place.

A City delegation, led by the executive chairman, Garry Cook, and containing representatives of Sheikh Mansour, the oil-rich Abu Dhabi billionaire who was funding the bid for Kaka, had spent several hours in negotiations with the player's father and representative, Bosco Leite, in Milan yesterday. Despite initial optimism that Kaka would join Mark Hughes' side before the close of the transfer window, the deal has collapsed.

It will be of little consolation to the City faithful that West Ham striker Craig Bellamy joined the club yesterday for £14m and that an offer for the midfielder Nigel de Jong has been accepted by Hamburg. Of further concern will be reports last night that Robinho had walked out of City's training camp in Tenerife after a row with Hughes. One report claimed the pair had fallen out over Robinho's desire to return to Brazil to celebrate his 25th birthday, which falls this Sunday, with family.

Robinho had hoped to be joined at City by his compatriot Kaka, but last night the Milan player explained his reasons for staying in Italy. "I feel great in a place where everybody loves me and I'm very happy to stay. My family were great allowing me to take the decision independently. I never argued with my father, as somebody wrote. I have listened to my heart as many people advised me to do.

"At Milan there are many wonderful people like [Berlusconi] and Leonardo, who is much more than a director for me, he is a real friend. I have never asked for a raise in my salary and I will never do. Milan were always nice to me raising my salary whenever they felt it was fair to do it. I can only thank them for this.

"After Saturday's game many people showed me their support, I have received drawings by kids trying to convince me to stay. It was wonderful. I remember when I left Sao Paolo some fans protested against me, here they all stand by my side instead. I'm currently celebrating this decision at home with a couple of friends.

"I'm a religious person and I believe the path God decides for us is not always the most logical one. Milan had never considered any offer for me in the past. This time it was different and I had to think about it but then I decided to stay. My team-mates were incredible. They all tried to tell me something and stay close to me in this period. I haven't been a Manchester City player not even for one minute."

Kaka's decision was as much of a relief to Milan supporters as it is a major setback to Hughes and City's ultra-ambitious owners.

An estimated 1,000 Milan fans had congregated outside the club's city-centre headquarters as Leite met the City delegation, in another vocal attempt to convince their idol to stay. Later supporters flocked to Kaka's flat after Berlusconi confirmed the Brazil international was staying.

"I'm very happy to keep at Milan a great champion on the pitch and a great man," Berlusconi said. "He renounced Manchester's offer saying that money is not everything and that he prefers Milan and the love of his team-mates and the fans. He could have earned the double of what he is earning now with us but he said 'no' even before knowing the real offer of Manchester City. He stays with us and we are happy because money is important but some things are much more important than money. All the world of football must be happy for this because money cannot buy everything.

"We offered the player the chance to consider the offer and make himself a fortune, but he has higher values. When I heard he would prefer to stay I said 'hooray' and we hugged."

Kaka was never involved in face-to-face negotiations with the City delegation and their withdrawal was confirmed in an ambiguous statement from Cook: "Whilst Manchester City Football Club has an obvious interest in world-class players of the quality of Kaka, we owe it to our fans that such a transfer must work on every level; commercially, financially, in terms of results on the field and within Manchester City's broader community."

Bellamy said "anyone in the Premier League would want to come" to City but that does not apply to Kaka.