The Football Association have ruled England out of any involvement in the Celtic Cup but are in talks about playing Scotland next summer.
FA chief executive Brian Barwick and his Scottish FA counterpart Gordon Smith had informal talks about an England v Scotland in South Africa yesterday but no final decision has been made.
However it is understood the FA made it clear they will not take part in any regular tournament involving the home nations and Republic of Ireland.
A Celtic Cup involving Scotland, Northern Ireland, Wales and the Republic moved a step closer after all four associations agreed in principle to a biennial tournament starting in 2009.
The agreement was announced on the Football Association of Ireland's website and commits the countries to arranging three tournaments, played on a league basis.
Home and away games will be rotated from one tournament to the next, in the manner of rugby union's Six Nations, with each team playing three matches per tournament.
Commercial arrangements and fixture dates are now being finalised.
Scotland manager Alex McLeish admitted England's inclusion would have made the competition more attractive.
'I'd love to play England but perhaps they feel they have bigger fish to fry,' he said.