The 15-year-old, who arrived at the Blues Academy in August 2006, signed an extended two-year student registration and had accepted the offer of an eventual two-year scholarship last summer.
However the England U16s international and his parent have since expressed a desire to leave the club for family reasons and to continue his development by relocating to a Premier League club in London.
Despite the best efforts of numerous officials and manager Lee Clark to convince the Sierra Leone-born player that his immediate future lay with Blues, Nabay is now in advanced talks with Fulham.
Responding to Nabay’s impending departure, a disappointed Clark said: “I made it abundantly clear to Foday in several meetings with him that he had the potential to become the youngest-ever player to play for Birmingham City Football Club’s first-team this season at the age of 15. That was how highly I rated him and how highly the club rated him.
“We wanted him to stay but as a football manager I couldn't have done anymore. I was offering him the opportunity that as long as he continued in the way he was with his development and continued to show the qualities that he has then there would be first-team openings for him.
“He’s going to a super club in Fulham because I know them very well having spent seven great years there myself but I just wish we could have had the time to make him part of my current group.
“It wasn't to be, he’s made the decision, we wish him all the best for future and we’ll move forward.”