The Welsh FA confirmed on Thursday they will take no further action after chief executive Jonathan Ford's comment that the next manager will "definitely" not be English.
Ford said last week that the Football Association of Wales (FAW) would prefer Chris Coleman's successor to be Welsh and "definitely not English".
"We have always favoured Welsh people because arguably the passion is there," Ford told BBC Wales. "Somebody said this earlier, Welsh most definitely, foreign possibly, but definitely not English."
The ruling FAW council met in Cardiff on Tuesday and voted for Ford's comment to be explored further, with a three-man disciplinary commission set up.
But an FAW statement said meetings had taken place in which the chief executive had clarified his comments.
"Following the discussions today, it was accepted that the documented comments were taken out of context and not in the manner in which they were intended," the statement said.
"The FAW and CEO will conduct a search for the new manager in an open and objective fashion -- the appointee will be the best person for the role.
"The CEO has apologised for the statement and the FAW officers, having reviewed the situation, do not propose to take the matter any further."
Former Wales players Ryan Giggs, Craig Bellamy and John Hartson and Coleman's former assistant Osian Roberts have all expressed interest in the Wales job.
Former West Brom boss Tony Pulis, who was born in Wales, has also been linked with the post.
Coleman's near six-year reign came to an end last month when he left to take over at English Championship side Sunderland.