Ahead of Wednesday night's 2-1 friendly win over Hungary at Wembley, Capello told ITV Sport the Los Angeles Galaxy midfielder, England's most capped outfield player with 115 appearances, was "probably a bit too old" to play for England again at the age of 35.
GEAR:Get a Beckham shirt
"Thank you, David," added Capello who used the former Manchester United and Real Madrid player as part of his backroom staff at the recent World Cup in South Africa.
Capello told a news conference after the match that he had a very good relationship with Beckham, but had not actually told him directly of his decision.
"No, I have not told him, but I will," he told reporters.
"We have to look for new young players, this evening you saw new players who can play on the right and left wings.
"So I hope David will be OK to come and play his last game here at Wembley in the next friendly game to come and wave bye-bye to the crowd."
That game is expected to be announced as a friendly against France in November.
Asked if he would consider him for England's upcoming Euro 2012 qualifiers which start next month, Capello replied, "no, no. We have to change it.
"David is a fantastic player, he has been really important but we need new players for the future."
Beckham made his international debut in September 1996 against Moldova and is England's second most capped player behind goalkeeper Peter Shilton who played 125 matches. He scored 17 goals.
On the debit side he is the only England player sent off twice while playing for his country, against Argentina in the 1998 World Cup in France and against Austria in a World Cup qualifier at Old Trafford in 2005.
His last international appearance was against Belarus at Wembley last October.
Beckham, who played in three World Cups for England but missed the World Cup campaign in South Africa through injury, has not played since rupturing his Achilles tendon while on loan at AC Milan in March.
He has always been adamant he would never quit international football and, shortly before Capello spoke to ITV Sport, Beckham repeated his stance in Los Angeles on Wednesday.
"I've always said I won't retire from playing for my country," said the veteran midfielder. "If I never get picked again or whether I get picked again for one more game or 10 more games I'll be available.
YOUNG PLAYERS
"There's a lot of good young players coming through for England but I'm available."
Speaking to reporters in Los Angeles after a training session, Beckham said he had set himself a mid-September return from injury.
"The doctor said October 1 but I hope it can be a few weeks before that," he said. "I'l
