Re-signing with the Warriors might be Issac Luke's only option after Newcastle withdrew an offer to lure the veteran hooker across the Tasman.
The Kiwi international was weighing up whether to join the Knights next season after he met with coach Nathan Brown in Wellington two weeks ago.
Newcastle initially offered the 31-year-old a one-year contract with the club holding an option for a second year, but the deal was pulled due to concerns an upcoming shoulder operation could see Luke miss the start of next season.
The Knights are still chasing a dummy half but after losing interest in Luke have reportedly turned their attention to signing off-contract Cronulla No 9 James Segeyaro.
"The Issac Luke negotiations are dead," Knights recruitment boss Troy Pezet told the Newcastle Herald.
"There are issues in and around Issac's shoulder surgery and when he would be available and we made a decision not to pursue it."
The Warriors have been waiting patiently for Luke to make a decision on his playing future over the past two months after offering him a modest one-year deal.
Luke was hoping to secure a longer and more lucrative contract but recommitting to the Auckland-based outfit may now be the only option left on the table.
The cash-strapped Warriors have little money left to spend and are unable to increase their offer due to salary cap restrictions.
Concerns about Luke's long-term fitness may also be a factor in why they are refusing to provide him with anything more than a one-year extension.
Luke was reportedly set to go under the knife this week and there are fears he may require a shoulder reconstruction which could keep him sidelined until March next year.
The 254-game veteran has had a history of shoulder problems and was forced to miss the Warriors' round 10 loss to the Roosters after suffering a dislocation during the previous week's win over Wests Tigers.
Luke, who was nominated for the Hooker of the Year gong at last night's Dally M Awards in Sydney, declared he wanted to remain at the Warriors.
"We want to stay in New Zealand as a family, my wife and the kids," Luke told NRL.com.
"It's a pretty important couple of weeks coming up. But we'll see how that goes in the next couple of days.
"My manager is trying everything he can to get a really good contract.
"In saying that, I'm happy where I am and obviously I want to stay."
The Warriors have been hoping the matter would be resolved this week and an announcement on Luke's future is expected soon.