Zarate is on-loan at Inter from Lazio and Corriere dello Sport says he is no longer in Ranieri's plans.
The development has Lazio president Claudio Lotito concerned, as he fears Zarate's value will plummet if he spends the remainder of the season in the stands. A recall to the Rome club cannot be ruled out.
Zarate's availability will alert Premier League clubs. The Argentine, once of Birmingham City, claimed he was joining Tottenham in the final week of the summer market before signing with Inter.