Nuno left Wolves at the end of last season and is expected to make a swift return to management in the Premier League this summer as he is in demand.
Crystal Palace were in negotiations with Nuno and his representatives and they were believed to be in advanced talks.
There were claims on Tuesday that a deal between Crystal Palace and Nuno was all but done and he would be the next manager at Selhurst Park.
But the negotiations have unravelled and Palace have now decided to walk away from their pursuit of Nuno.
The Portuguese was their priority target and the club were hopeful that a deal could be agreed soon.
But Nuno’s demands forced Crystal Palace to end their pursuit and look for other options for their vacant managerial role.
Wolves finished just a point above Crystal Palace in the league table last season and the Eagles did not deem fit to give in to a fresh set of demands Nuno made late on Tuesday night.
He could still be in a Premier League dugout next season as Everton are keen on taking him to Merseyside.