The 34-year-old defender was expected to join the Scottish Premiership side before the deal suddenly fell through at the last minute.
Lescott, 34, was widely expected to join Rangers imminently after Villa owner Tony Xia revealed on Thursday evening via his Twitter account that the Championship club would be subsiding a portion of his wages in order to facilitate the out-of-favour defender’s switch to Scotland.
However, reports subsequently emerged on Friday lunchtime that the deal was off due to “family reasons” forcing the former England international to turn down the Scottish Premiership side’s offer [Sky Sports].
Speaking shortly after at his pre-match press conference ahead of Saturday’s trip to Derby County, Di Matteo told reporters: “I think it’s pretty clear that we had an agreement with Rangers. I think he didn’t agree personal terms, so that’s fallen through now.”
Despite the latest developments, Lescott is still expected to leave Villa before the summer transfer window closes after being deemed surplus to requirements following an awful debut season in B6, with Sky Sports reporting that Sunderland would be prepared to offer him the chance of a fresh start at the Stadium of Light.
The ex-Manchester City man, whose contract expires next summer, previously worked with new Black Cats boss David Moyes at Everton between 2006 and 2009 before making the move to the Etihad Stadium, and it has been suggested that the pair would be interested in reuniting on Wearside.
Rangers, meanwhile, could now turn to former Villa defender Philippe Senderos to fill their need at centre-back after the Switzerland international spent the week training with the Scottish giants.
The 31-year-old, who was released by Villa last January after an injury-hit 18-month spell, has impressed Gers manager Mark Warburton with his work ethic since arriving in Glasgow and seems to have recovered from his recent fitness problems after getting regular game time during a short stint with Grasshoppers Zurich over the second half of last term.
"I can't speak highly enough of Philippe. He hadn't been training with a team for a few weeks, so his level of fitness is outstanding,” Warburton told Sky Sports on Friday. "His CV is well-documented, but his level of fitness, the way he has fitted into the group has been first-class.
"He has dealt with training effortlessly all week so we have to look at a number of options and I have been very impressed by Philippe."