A statement on www.avfc.co.uk has confirmed that Liverpool have failed to meet the deadline for a renewed bid.
The Reds have put in numerous offers for Barry but have been unable to meet the £18million price tag set by Villa.
The England midfielder, 27, had claimed a move to Anfield was his dream but it is one which has been crushed.
Instead, Liverpool have made the fantasy of another player turn to reality.
Rafa Benitez snapped up Spurs striker Robbie Keane on Tuesday, meaning they now lack the necessary funds to bid for Barry.
Keane, a life-long Liverpool fan, was clearly the number one target for Benitez who paid over £20million for his services.
And that will please Villa fans who know the Reds have run out of money and more importantly run out of time.
All at the Claret and Blue clearly want Barry to stay and will now field him in their UEFA Cup second round qualifier.
That will rule him out of playing for another team in Europe this season which means no top club will want him.
The former Brighton man has enjoyed huge support from the loyal Villa faithful and he will now get the chance to repay them.