America-born Prakash played 10 ties for India in the Davis Cup before he was barred in 2008 after the sports ministry introduced a rule saying that only Indian passport holders could represent the country at sports. India does not permit dual citizenship.
With an ongoing row over the running of the Davis Cup team expected to see some players skip the home tie against South Korea next month, the All India Tennis Association had hoped the government would end the passport rule so that Prakash could compete.
Vijay Amritraj, a winner of 16 singles and 13 double titles and a former Davis Cup finalist, said the AITA had asked him to speak with the sport ministry to help with negotiations.
"They said they don't see any reason why he (Prakash) can't play, he has played for six years. So I said 'fantastic, thanks very much' and I put the phone down," Vijay told Reuters in Singapore on Friday.
"They wrote a letter saying they had no objection that Prakash is selected because it is the prerogative of the federation so they were going to pick him to play. Then six hours later ... they faxed a letter over and they said we stick to the same (passport) policy."
Does Prakash still want to play for India?
"Well that's a different story," Vijay said. "It is terribly unfair to someone's career.
"I don't know the thinking behind it. I don't think there is anyone more patriotic. It is not Prakash's choice that he was born in L.A., his idiot father had to move over there for whatever reason."
The secretary of the sports ministry confirmed the conversation.
"It's not correct to say we backtracked. I did speak to him and at that point I said the ministry had no role in the selection of the team," P.K. Deb told Reuters by phone.
"But subsequently when we carefully went through the legal situation we found out there was no option to allow anybody who doesn't hold an Indian passport to represent the country.
"We have no role to play in the selection of the team."
California-born Prakash jumped 114 places up the ATP rankings to 437 on Monday after getting through the qualifiers and then into the second round of last week's Chennai Open, losing a close contest with eighth seed Go Soeda of Japan.
Without Prakash, the seventh best ranked Indian after his injury-marred two years, and the other players at odds with the AITA over new coaches, money and venues, Vijay does not hold high hopes for the Asia/Oceania Zone Group I tie in Delhi, which begins on Feb. 1.
"Under normal circumstances we should win this match," the twice Wimbledon and U.S. Open quarter-finalist said.
"But the federation was banking a lot on Prakash playing and they thought they had it covered but this issue has come up again so I have no idea who they will pick for the team."
The row which has been played out in the media quickly follows on the back of the issues India had fielding Olympic doubles teams in July, with players refusing to partner 13-times grand slam doubles winner Leander Paes.
Vijay said the latest troubles are all down to a lack of communication between the two parties and that it could have been easily avoided.
"There isn't any dialogue between the groups. It would almost be like playing a doubles match and not really knowing your partner," said the 59-year-old, who played in 32 Davis Cup ties.
"Administrators are expected to administer the game in a proper manner but they are not going to be able to administer the game if they don't have enough knowledge from the players.
"There is no reason to hold this debate in the press, just need to sit down across the table."