The wantaway forward has been stripped of the captaincy and was also disciplined by the Irishman before Saturday's 1-1 draw against Burnley.
Walters has been linked with Premier League sides Stoke and West Brom and the striker has informed Keane of his desire to leave Portman Road.
Keane left the forward out of his squad to face the Clarets as the former Sunderland boss was not happy with the player's reaction to being stripped of the captaincy.
The Tractor Boys looked set for all three points when David Norris scored with four minutes remaining after Clarets defender David Edgar had been sent off.
But Clarke Carlisle's stoppage-time goal gave the 10 men a point.
Keane revealed the reason behind Walters' absence after the game and also said he hopes to add to his squad next week.
"Jon was due to play but I spoke to him on Friday and I've been thinking about the captaincy." said Keane.
"For a player with a clear desire to leave, I don't think it's right he should be captain. I thought it was a straightforward one.
"Jon's reaction was unbelievably overboard.
"He's been disciplined and as long as I'm manager of this football club he'll never kick a ball for us.
"We hope a deal can be done quickly but until we get the fee we want it'll drag on a bit longer."
He added: "I'm quietly confident we'll have three players in next week because a week into the season we're down to bare bones."
Keane remained upbeat despite the late lapse which denied his side victory.
He said: "I thought it was absolutely brilliant - a good game, good tempo, good spirit, good energy.
"We were up against it. Physically, they looked stronger and by the end my team looked unbelievably small, in terms of height.
"The average height of their team must have been 6ft 1ins. The average height of ours was probably 5ft 1ins.
"If ever we were going to concede it was from a set-piece because they've got some big, big lads.
"But they've got massive hearts and I'm proud of them. They gave me 100%."
Burnley boss Brian Laws hailed the never-say-die attitude of his players.
He said: "I was probably the happier of the managers because with 10 men it was always going to be tough.
"To concede in that last period was tough on the players because I thought we were in control for large portions of the game.
"Having said that, neither goalkeeper really had a lot to do.
"There was a lot of good interplay but the final pass was a little lacking.
"The players showed energy and commitment right to the end so I was delighted."