Milan's vice-president Adriano Galliani told a news conference in Rio on Thursday the Italian side will seek a fee for the 30-year-old forward whose current deal ends in June.
"I'd like to make it clear that Milan have not rescinded their contract with Ronaldinho," said Galliani, who jokingly stated a preference for a move to Flamengo who wear the same red and black colours as Milan.
"Ronaldinho is going to see which is the best decision for him and he will tell Milan. Milan and Ronaldinho will decide together."
Ronaldinho, who was also at the news conference, has failed to win a regular starting place at Milan this season and said he was keen to return home and play in the Brazilian championships.
"I want to return to play the championships in Brazil. I didn't get the chance to win many leading titles in Brazil and at this stage in my career I wanted to come back to Brazil," he told reporters at Rio's Copacabana Palace.
Ronaldinho has just one Gaucho (Rio Grande) state championship title in 1999 to his name.
"Everything that's happening is because today (Thursday) I reached an agreement with Milan. I'm free to continue my life here in Brazil," added Ronaldinho while outside hundreds of fans of Rio-based Flamengo gathered for a glimpse of the player.
DECISION SOON
Ronaldinho's brother and agent Assis added: "We have a deal with Milan that allows us to talk to Brazilian clubs. Ronaldinho is under contract but we have this freedom.
"We have a very important contract (at Milan), all of you know the figures surrounding Ronaldinho (but) we will find a solution and soon we will have a decision."
He added that an announcement would be made on Tuesday or Wednesday.
A World Cup winner with Brazil in 2002, but overlooked for the 2010 finals, Ronaldinho also hopes to convince national team coach Mano Menezes that he can be a part of his squad for the finals on home soil in 2014.
"This is the start of an important stage in which everyone is looking at the World Cup and I'd like to be here to continue my career in Brazil," he said.
Ronaldinho's first club Gremio, 2009 champions Flamengo and Palmeiras, managed by former Brazil, Portugal and Chelsea coach Luiz Felipe Scolari, are all interested in signing the forward.
Gremio seem to be heading the chase though with club president Paulo Odone saying on Wednesday that all he needed to bring Ronaldinho home was for Milan to free the player.
Ronaldinho, FIFA world player of the year in 2004 and 2005 while at Barcelona, left Gremio in controversial circumstances in 2001 to play for Paris St Germain.
There was a wrangle over a fee, with soccer's world governing body FIFA intervening, and his possible return is seen by Gremio fans as a chance for Ronaldinho to redeem himself.
