He said: "I met with Gareth, his agent and the chairman last Monday and we agreed a 5pm deadline. It was not coercion, it was an agreement. We felt the situation needed to be resolved and Gareth and his agent agreed with this.
"Liverpool made their first intention of signing Gareth clear four months ago and they have known for some time that Gareth wanted to go and what the price was. It was not a case of Liverpool being 15 minute late for a deadline, that was simply not true. The position was clear before the deadline that they were unable to do anything before that stage. So because of that we at the football club were naturally delighted - we were thinking that that was it because we had the prior agreement of Gareth and his agent.
"I gave it some thought and realised that at the end of it all there was little point in pretending. Gareth would want to join Liverpool and therefore there would be no deadline. I have agreed with Gareth now that Liverpool have got all the time in the world if they want to raise the money. That's the case. That's it. It is up to Liverpool, Gareth and his agent now. The ball is firmly in Liverpool's court, that's fine, not a problem.
"I have got to get on with things. I have got to manage a football club and I want to manage one where some players still want to be part of it. The chairman and myself are particularly disappointed but that's the way it is.
"Liverpool will get their wish and Gareth and his agent will get their wish at some stage between now and whenever it is."
O'Neill made it clear he was not intending to drop the price to speed up the deal however, especially as Liverpool had managed to rustle up £18million to buy Robbie Keane from Spurs.
He said: "It seems they can find money for another player who wasn't in the equation certainly four months ago and certainly two months ago."
