Fernando Torres could leave Chelsea before the summer transfer window closesReuters

Jose Mourinho's attempts to bring back Tiago Mendes to Chelsea seems to have hit a dead end after the Portuguese midfielder signed a new two-year contract with Atletico Madrid.

The Blues were believed to be the favourites to sign the 33-year-old midfielder, who earlier played for Chelsea under Mourinho in the 2004/05 season, after he was released following the expiration of his contract with the La Liga Champions.

However, the Portuguese has decided to remain with his current club after they offered him a fresh two-year contract.

"The club offered me the chance to renew my contract. I felt proud because we had had an incredible season, but I had thought it was the right time for the cycle to come to an end," Tiago told Atletico Madrid's official website.

Despite admitting he received a number of offers from many clubs from "various international leagues", he says that he chose to continue with the Los Rojiblancos."I have been offered the chance to play in various international leagues and have taken some time to evaluate my options during the summer, but my final decision became clearer and Atletico was the only option," he added.

Tiago claims that Atletico Madrid boss Diego Simeone, who helped his side reach the Champions League final as well as win the La Liga title last season, had always left the "door open" for him in case he wanted to continue at the Vicente Calderón Stadium.

"[Simeone] always left the door open for me and I am now very happy that I have made the right decision. I want to thank the club for waiting for me and offering me the opportunity to remain here. I can't wait to help out in any way I possibly can," Tiago said.

Meanwhile, Atletico Madrid are reportedly in discussions with Chelsea over the potential transfer of Spain striker Fernando Torres, according to the Daily Mail.

Atletico chief executive Miguel Angel Gil Marin was reportedly in London discussing a deal that could see the 30-year-old make a return to his boyhood club.

The Blues, who paid £50 million to lure the striker out of Liverpool in January 2011, are reportedly prepared to let the Spaniard go for a knocked down price of £13 million. But Atletico reportedly feel that they can land the Chelsea flop for even less.

Chelsea will probably be willing to accept an even lower fee for Torres as the striker's departure will free up around £175,000-per-week in wages.

The Spain striker could be leaving Chelsea in a player-plus-cash deal as Mourinho is reportedly still interested in landing Atletico's £23.7 million-rated centre-back Miranda, despite the Portuguese insisting the Blues will not be bringing in more players this summer.