The news is only likely to heighten the powderkeg atmosphere between Bridge and Chelsea's Terry when City visit Stamford Bridge on Saturday.
Bridge - who was due to be watched by Fabio Capello at the game - is thought to be unwilling to shake the Blues skipper's hand during the traditional prematch line-up and is described as still being "devastated" by his former next-door-neighbour's betrayal.
A statement from Bridge read: "I have thought long and hard about my position in the England football team in the light of the reporting and events over the last few weeks.
"It has always been an honour to play for England. However, after careful thought I believe my position in the squad is now untenable and potentially divisive.
"Sadly therefore I feel for the sake of the team and in order to avoid what will be inevitable distractions, I have decided not to put myself forward for selection. I have today informed the management of this decision. I wish the team all the very best in South Africa."