Newport Gwent Dragons have been refused permission to proceed with a possible transfer of their Wales number eight Taulupe Faletau to Aviva Premiership club Bath.
Wales head coach Warren Gatland and the Welsh Rugby Union need to approve international players moving outside Wales.
The WRU confirmed on Tuesday it had refused to sanction the Dragons' request to agree Faletau's Bath transfer, with Gatland having written to the Gwent region.
The letter explains the decision is based on the commitment in the Rugby Services Agreement to limit the number of players being selected from outside Wales in future.
Under terms of the RSA signed between the WRU and Wales' four professional regions, including the Dragons, Gatland can only select two so-called "wild card" players not based in Wales for the remainder of this season.
Those places, which are covered by the WRU senior player selection policy, would currently be filled by Harlequins centre Jamie Roberts and Bath fly-half Rhys Priestland.
Priestland, though, is reportedly taking an 18-month break from Test rugby to concentrate on his Bath career.
Concerns surrounding 52 times-capped Faletau moving to England are understood to revolve around his release for Test matches and Wales training sessions. Faletau did not take up a WRU national dual contract offer made to him last season.
Faletau, 24, will be out of contract at the Dragons next summer, meaning he becomes a free agent unless the Dragons could obtain a transfer fee - likely to be six figures - for him before then.
WRU group chief executive Martyn Phillips said: "We stand alongside the regions in our commitment to try to keep the best Welsh-qualified players here in Wales where they can compete for international honours.
"We want the best players in Wales as role models for youngsters, making sure the regions are as competitive as possible and making sure the coaches are working with the finest talent.
"We fully understand that the Newport Gwent Dragons have acted entirely properly in this matter, but we have a duty to act in the way we feel is in the best interests of the whole of professional rugby and the international game in Wales.
"Although there are circumstances under which moves out of Wales by experienced players can be sanctioned, Taulupe's status as a player and importance as a role model means we would like him to be playing his rugby here.
"Taulupe is under contract until the end of the current season, and we do not believe it is in any of our interests to withdraw from that agreement.
"He is a 24-year-old with a lot more to offer Wales, and our desire now is to keep him under the umbrella of our systems and structures to ensure he has the best opportunity to achieve his full potential."
"We have a duty to act in the way we feel is in the best interests of the whole of professional rugby and the international game in Wales" WRU chief executive Martyn Phillips
Speaking before the WRU released their statement, Dragons chief executive Stuart Davies said: "This has been a difficult and sensitive rugby matter, in which the needs and wishes of a player, a region, the wider game in Wales and the national side have all been part of a rather challenging conundrum.
"At the heart of it, of course, is Taulupe, who has been loyal to and is very happy at the Dragons.
"Having become aware however of possible interest in him from an English club, he formally requested permission to speak to them, which we granted, with a view to establishing what was best for the player and indeed the region.
"There then followed a significant period of discussion and negotiation, during which we adhered to the provisions of the RSA.
"For this particular scenario, release of Taulupe from his contract would have required the national head coach's permission, and the 'wildcard' provision within the WRU senior selection policy was an important factor in this regard.
"As such, upon Rhys Priestland's reported break from international rugby, the matter was revisited.
"It was always going to be painful to lose Taulupe, given what we are trying to build here at the Dragons, but our decision to pursue the transfer option was a very measured one, having regard to a number of considerations.
"While we fully respect the aspirations of the RSA, naturally it is disappointing on this occasion that we have not been able to act independently in the best interests of the region, or to receive the required support in achieving our preferred outcome.
"That said, Taulupe will now be part of our preparations for the weekend, and we look forward to welcoming one of the world's best number eights back into the fold."