Brian McDermott confirmed earlier on Tuesday that Reading had lodged a bid for Ince as they look to win the race for the 20-year-old.
A host of clubs have been linked with a move for Ince during this month's transfer window with Liverpool seeing an offer turned down at the start of the month.
However, Blackpool are reluctant to lose Ince and have placed a huge price tag on the England Under 21 international's head.
With Blackpool refusing to budge on Reading's offer they have now decided to withdraw their bid for Ince and will look elsewhere for prospective signings before Thursday's deadline.
McDermott had earlier described the qualities that Ince would bring to Reading if was able to secure his signature.
"He's got quality, he can play number 10 or out wide on either side, he loves his football and can score or create goals," said McDermott. "He's got a real hunger.
"He's a good player with potential, I imagine there's a lot of interest in him. But once again I have to say this is a player who doesn't belong to us."