The former Arsenal midfielder has six months left on his contract at St Andrews but has turned down improved terms from Birmingham.
Sunderland manager Steve Bruce is prepared to pay £1million for the 25-year-old.
Negotiations: Larsson (left) has seen talks about a new Birmingham deal break down
McLeish was last night trying to achieve a compromise with RobbieKeane over his move to Birmingham City after Harry Redknapp blocked aloan move to West Ham.
The Scot was attempting to broker a deal with the Republic ofIreland international that would allow his family to remain near thecapital as part of his £7m switch from Spurs.
Birmingham were still hopeful of securing Keane last night, despitethe club targeting Manchester City forward Jo as a potentialreplacement.
Boss McLeish vows to sort out new deal for Birmingham midfielder Seb LarssonBirmingham base survival chances on joint bid for Spurs' Bentley and KeaneAll the latest Birmingham news, features and opinionAll the latest Sunderland news, features and opinion
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