The former Manchester City striker became the scapegoat for Milan's 4-1 loss to Atletico Madrid, which paved way out of Europe's biggest competition for the club.
According to the Mirror, Milan are set to miss out any European football next season as the club stands at the 10th position in Serie A of the Champions League.
The Italian forward, who came back to Italy last January, has scored just seven goals in 29 Champions League matches during his career and only two in eight this season, the report added.
The Milan hierarchy is no longer willing to tolerate Balotelli's off-field behaviour as he is not producing the leadership or goals on the pitch and his availability might open the door to a return to the Premier League this summer.
Milan's on-loan Adel Taarabt and Michael Essien are speculated to be dropped and coach Clarence Seedorf's position is also under threat, the report added. (ANI )