Prandelli is expected to return to club football for the start of the 2014-15 campaign once his contract with the Italian Federation expires.
Amongst the many candidates who could replace him is Capello, but the former England boss looks set to continue his stint in charge of the Russian national side.
"I’ve not heard the Capello links with Italy," Russian Minister of Sport Vitaly Mutko told Itar Tass. "But he will remain as our boss at least until the end of 2014.
"We have also already offered him an extension until 2018."
Capello, 67, replaced Dick Advocaat on the Russian bench in the summer of 2012 after the Dutchman resigned.
The former Roma, Milan, Juventus and Real Madrid manager has previously stated that he had no interest in taking charge of the Azzurri before he retired.
He was linked with Paris Saint-Germain this season but nothing materialised of the reported interest.
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