Cardiff and Blackburn were due to face two local sides in the event on the weekend of July 17th - 19th but City Chairman Peter Ridsdale has confirmed that the tournament is off.
He is is now trying to arrange to face a couple of other teams in Portugal.
"The decision not to go ahead with the tournament was out of the blue for both Blackburn Rovers and ourselves," said Ridsdale. "We have talked through a number of options and the decision is that the team will be going to Portugal."
City play their first pre season friendly game at home in the new stadium on Friday July 10th against Chasetown.