Leeds moved to bring in former Ajax boss Schreuder, flew him to the UK to watch a game at Elland Road and then show him around their facilities.
He looked in line to take over, but Leeds had a rethink amongst some concern from their fans and Schreuder was left baffled at the move breaking down.
Leeds are now claimed to be exploring appointing former Watford boss Gracia to come to their aid as they scrabble around for a manager.
However, it is suggested that they could yet rekindle their interest in Schreuder.
The Dutch tactician remains available and keen on the position at Elland Road as he looks to return to work.
Leeds could decide to go back in for Schreuder as they continue to weigh up who would be best placed to save their Premier League status.
Following defeat at Everton, Leeds dropped inside the relegation zone and are facing a fight to make sure they are not playing Championship football next season.
They appeared to initially be convinced that Schreuder was the right man to take charge and he could still have fans within the Elland Road boardroom.
