Blues boss Alex McLeish said: "We are disappointed at the lack of progress by David. He was coming back - and looking good - but he has had another little setback.
"We are going to have to get him re-assessed for the lad's sake as well as anything else.
"He is really, really desperate to get back playing again. He is such a good professional and seven months out is a long time.
"Will he need more surgery? I don't know. He has got pins in his knees and, if these have to be taken out, then it will require a bit of that (surgery).
"It is a shame for David because he is really down at the moment and we are doing what we can to keep his morale up."
McLeish has urged Murphy to take advice from City midfielder Barry Ferguson in coping with the situation.
The former Scotland international suffered a similar blow when playing for Blackburn during his previous spell in the Premier League.
McLeish said: "Barry Ferguson was out for a similar time with a busted knee-cap at Blackburn and, if David wants a shoulder to lean on, he can talk to Fergy and hear of his experiences.
"We'll also maybe find out what Barry did in his rehab in dealing with his injury."