Discarded All Blacks flyhalf Stephen Donald has been left in limbo after he failed to secure an English working permit and his deal with English Premiership club Bath fell through.

To make matter worse, the Blues have dismissed reports that they are the next port of call for Donald.

With Aaron Cruden having signed with the Chiefs, Donald is unlikely to find any contract offers coming out of Hamilton.

It was reported on Sunday that he would move to Auckland, but Blues CEO Andy Dalton said the rumours that Donald has signed with his franchise are false.

"Yeah I was fascinated by that, as you know I don't discuss negotiations but I will say I was surprised," Dalton told Newstalk ZB.

Donald, 27, had been expecting to play for Bath next season and a deal was agreed with the English club.

However, the move hit a stumbling block when Donald couldn't get a work permit to play in the United Kingdom.

Because Donald couldn't qualify to play in Britain through ancestry, he needed to make it in on his playing record.

The British government will give work permits to New Zealand players who've started Tests for the All Blacks in the past 18 months.

While Donald has played three Tests for the All Blacks over this period, against Australia, Scotland and Wales on last year's end of season tour, they were all appearances made from the bench.

That meant he was regarded as of not a high enough standard by the British government.

His absence from the All Black World Cup training camps and the first squad of the year mean he has no chance of starting a Test this year to qualify for Bath's needs.

Donald could have chosen to go to Japan, but it's believed he wanted to continue to play at a high level.