Brighton made a move to sign the England U21 international in January but Leicester were not prepared to sell unless they received an extraordinary offer while Dewsbury-Hall, who has been at the club since he was eight years old, was reluctant to go.
Brentford remain in contention while other sides in the lower half of the Premier League are monitoring developments.
Leicester are under pressure to sell amid ongoing PSR concerns. Midfielder Wilfred Ndidi is due to leave as a free agent amid interest from Everton.
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