Birmingham have now rejected a transfer request from Larsson, according to his agent, Per Johnson.
Per Johnson: "On Thursday, Seb gave in a transfer request and Peter Pannu (acting chairman) emailed us to say Birmingham would be making a new contract offer.
"The reason why the request was put in was as a protest at the way Seb has been treated.
"We were told pre-season that the club wanted to sell him, then that they wanted to discuss a new contract which we basically agreed.
"Then in December a new offer was made which was lower than the one we had verbally agreed so naturally we turned it down.
"Then the manager (Alex McLeish) said he wanted to keep Seb for the rest of the season, then we got an email saying Birmingham had accepted an offer from Newcastle.
"So, we had been in talks with Newcastle until this Wednesday when the plug was pulled again and Birmingham decided they wanted to keep Seb.
"Birmingham have treated Seb like cattle. Going backwards and forward four times is not acceptable.
"The club needs to sharpen up a bit and get a bit of class."