Biabiany's move to San Siro appeared to have been confirmed earlier on Monday as the club posted a picture on their Twitter account with the French winger wearing a Milan scarf captioned by a message welcoming him to the 18-time Italian champions.
Milan were reported to have paid around €4 million to sign the 26-year-old, with defender Zaccardo poised to move to the Stadio Ennio Tardini as part of the deal.
A brief statement on Milan's website read: "The swap-deal between Biabiany and Zaccardo has fallen through after Zaccardo turned down the move."
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