The teenage shot-stopper was scheduled to fly out to France in July as part of the young England side going in search of European Championship glory.
However, had he been allowed to go, Pompey would then have been left with no senior keeper on their books for pre-season.
As a result, new boss Steve Cotterill has requested that O'Brien be omitted from the squad.
That will allow him to report for training on Thursday and figure in Portsmouth's first pre-season friendly against Havant & Waterlooville on Saturday 10th July.
"We have not got a goalkeeper so I'm afraid it's something we have to do," Cotterill told The News.
"As it stands, we are desperately short of keepers in the squad and we don't know the situation with David James (as his contract is set to expire).
"We could be given dispensation by the Football League to sign another one even though there is an embargo.
"But at the moment we need somebody in goal so Liam will not be going off with England next month.
"We are grateful to the FA for understanding our predicament."
One solution for Pompey could be to tie Jon Stewart down on a permanent contract.
He was on their books until the end of the 2008/09 season, before turning down a deal in order to fulfil his ambition of playing abroad.
Stewart did, however, return to Fratton Park towards the end of last season, as a triallist, and was offered a full-time contract prior to Cotterill being appointed as Avram Grant's successor.