The SPL champions had a bid of £1.5 million turned down earlier in the week and were urged to up their bid if they wanted to land the Spaniard.
But it now appears that Cuellar, who is recovering from an ankle injury, will stay an see out the final year of his deal.
On his recovery, Cuellar is optimistic that he'll be available for Villa's opening game against Fulham.
“The recovery is going well, I’m gaining strength and in a couple weeks I’ll be training with the team,” Cuellar said.
“If there is no complication I’ll be ready for the first game, away at Fulham. I hope we have a better season this year.”
Previously, both Cuellar, and Rangers manager Ally McCoist said a deal between the two club could be agreed.
"Gordon Smith (director of football) has been talking to Aston Villa about Carlos," said McCoist in the Daily Record. "I'm very keen for that deal to go through."
Meanwhile Cuellar, who spent just one season with Rangers during 2007/08, said he would welcome a return to Ibrox.
"It's exciting if there is a possibility to go back because all of those good memories come back - the city, the club, the people, how much they loved me and how much I loved them," he said.