The Germans are not in a position to meet the €12 million asking price, while Horst Heldt says Spurs do not want to allow the midfielder to return to Gelsenkirchen on loan
Spurs are demanding £10 million (€12m) for the midfielder but Die Knapper are not in a position to meet that figure.
"We can't really imagine such a transfer, financially," Keller told Bild. "Talks have not yet reached an advanced stage."
Indeed, Schalke sporting director Horst Heldt explained that the proposed deal has also been put on hold because of Spurs' refusal to even entertain the idea of a loan until the end of the season.
"We have good contact with Lewis. He enjoyed playing with Schalke and he is not quite happy in London right now," he revealed.
"But Tottenham do not want to let him leave on loan - that is why the deal is difficult. It makes no sense for us, spending a lot of money for a player who we sold a year ago because his contract was expiring.
"We are currently not negotiating with Tottenham."
Holtby has started just six Premier League games this season, and just once under new coach Tim Sherwood.