Hughes continually stated that he did not want Schwarzer, who arrived at Craven Cottage from Middlesbrough in the summer of 2008, to leave the club.
The Australian had long been linked with a move to the Gunners, whose goalkeeping situation has come under intense scrutiny following high-profile errors by both Manuel Almunia and Lukasz Fabianski, with Fulham rejecting two bids from the Emirates Stadium outfit.
But Schwarzer's departure was made even less likely following the injury suffered by deputy David Stockdale in the 2-2 draw with Blackpool at Bloomfield Road last weekend.
"We talked about Mark's situation on a number of occasions and ideally we wanted him to stay," Hughes, who took over at Fulham following the departure of Roy Hodgson to Liverpool, said.
"We understood that there was an interest from Arsenal but given our current goalkeeping situation there was no chance of him leaving."
Hughes also dismissed speculation of Arsenal making an improved £4 million bid for Schwarzer on transfer deadline day.
’There were two real strong enquiries but there was never a bid today [Monday]," he added.
Having succeeded in keeping Schwarzer at the club, Hughes faces an anxious wait to see whether he will be able to call upon either Schwarzer, who has been struggling with an injury of his own, or Stockdale for Fulham’s next Premier League fixture against Wolverhampton Wanderers on September 11.
By Jeorge Bird
