The former England international was told he would not be offered a new contract at the Reebok Stadium when his current deal runs out in the summer and came close to joining up with Ryan Nelson's MLS side on a short-term deal.
But the 36-year-old has stated the move has fallen through.
A statement released by the striker said: "It has been a complete rollercoaster since first speaking with Ryan Nelsen on 18th April. As it stands I will not be leaving for Toronto FC as reported.
"My young family and I were naturally very excited about the opportunity of going to Toronto on a short-term deal but after legal advice we felt that certain obstacles put in our way were too large to overcome.
"Whilst it has been the toughest month of my 10-year BWFC career I remain, as I always have done, 100 per cent committed to the club. I will be ready if the manager needs me and hopefully have a part to play in helping the club return to the Premier League.
"I have some fantastic memories of the last 10 years and feel honoured to have been the captain of this great club for the last five years. Hopefully it will finish with a fairytale ending."