The news follows a bout of claim and counter-claim between the two clubs which has now been blamed on a "misunderstanding".
In a statement released via the Hammers' official website, the club said: "West Ham and Sporting Clube de Portugal acknowledge that a breakdown in communication based in contacts between representatives from both clubs in respect of a possible transfer of William Carvalho was the cause of a misunderstanding.
"Subsequent to this, the clubs have had positive communications and the matter is now resolved. On this basis, friendly relations between the clubs will resume and there will be no barriers to both clubs negotiating or working together in the future."
Hammers joint-chairman David Sullivan claimed the club had a bid for the Portugal international accepted during the summer transfer window, but ran out of time to complete medical checks and push through the swoop.
Sporting denied any offer had been received, prompting a less than savoury series of exchanges between the parties during which the Lisbon-based club's president Bruno de Carvalho referred to Sullivan and co-chairman David Gold as "the Dildo Brothers".