The Premier League giants have a deal in place with Juventus to sign the midfielder in the final weeks of the transfer window.
Manchester United have been in talks with his representatives, led by his mother, since last week and the negotiations were expected to be difficult.
It emerged on Tuesday that the deal is now off as Manchester United are refusing to meet Rabiot’s wage demands, which were described as excessive in some quarters.
But according to French sports daily L’Equipe, the negotiations between the two parties are not completely off for the moment.
Rabiot wants a contract worth €9m per year but Manchester United are not prepared to go beyond €6.5m per year.
Various payment structures have been discussed but the two sides are far from reaching an agreement.
While the talks could still be ongoing, Manchester United are unlikely to want to overpay to sign the Frenchman.
There is already talk of the Premier League giants shifting their focus on other targets such as Real Madrid’s Casemiro.
Rabiot’s camp are arguing that he could be available on a free transfer next year and their wage demands are justifiable.