كتب : Sherif Tarek
The Rossoneri revealed their intention of landing Dzeko early this month, and the 23-year-old Bosnian said that a summer move to San Siro appeals to him.
But Wolfsburg are keen to keep hold of their international ace, and thus offered him a lucrative four-year contract.
According to Bild, The new deal is worth £2.5 million per season.
"We have great plans for the new season. We need Edin," Wolfsburg boss Armin Veh told the German paper.
Wolfsburg also gave Dzeko another option, which is to extend his current contact until 2012 and slightly increase his annual wage.
Milan are seeking to bolster their frontline with new signings, and will go either for Luis Fabiano or Emmanuel Adebayor if they fail to sign the former Teplice man.