With Euro 2008 fast approaching it was widely expected that the 'keeper would leave the City of Manchester Stadium during the January transfer window after making just five appearances for the club this season.
However, he turned down a loan offer from Turkish giants Galatasary after insisting he was only interested in permanent deals.
"It's obvious that the upcoming internationals will be important (Sweden face Turkey on Wednesday)," Isaksson told reporters.
"It's just a matter of keep on training and hopefully play as many reserve games as possible in an attempt to regain a place in the first team.
"I do not want to go out on loan and it feels good to have made that decision as the last month has been tough not knowing what will happen."
Sweden coach Lars Lagerback also admitted he has no problem with his first-choice 'keeper turning out for City's second string.
"I believe that it is quite possible that he will be able to achieve sufficient fitness levels playing for the reserves," he said.