Bolton manager Owen Coyle revealed: "Gary suffered a pain in his arm and it became severely swollen.
"It turns out he had a blood clot in his arm, so he is going to be out for a number of months."
Cahill is due to be released from hospital on Monday after being kept in since Saturday.
"It is a severe blow for the boy but our main concern is his welfare. We have to make sure Gary is fit and well," said Coyle.
"He will miss the next few months, it might be for the rest of the season, we will hear from the specialist later.
That could be us relegated Jimbo "The clot needed to be resolved and in doing that you need the medication. It follows you can't play.
"I don't think it is a sport-related injury, I think it is just one of those things that can happen to anyone at any given time, " said the Bolton boss.
The former England Under-21 player has been in excellent form for Wanderers this season, earning a call into the full England squad and had been linked with a move away from the Reebok Stadium during the January transfer window.
Coyle had led calls for England boss Fabio Capello to take the former Aston Villa player to this summer's World Cup in South Africa.
However, his chances of making the squad have now been severely dented - even if he does manage a return for his club before the end of the Premier League season.
It is a severe blow for the boy Bolton boss Owen Coyle Coyle, at least, seemed in little doubt that his chances were scuppered: "He had a chance of going to the World Cup - but that chance will come again."
The former Burnley boss, though, promised that Cahill will receive first-class treatment in his recovery bid: "Gary will get the best care available to him. As much as we love football, we will focus on making sure Gary recovers well."
Cahill was part of England's squad for the World Cup qualifying victory over Kazakhstan in June, 2009 but is yet to win a senior cap.