Bruce was desperate to sign the Egypt international in what would have been a £6million deal and was confident earlier in the week of the transfer going ahead.
But what the Blues boss described as "a few issues" - more than just agreeing personal terms - appear to have scuppered the deal.
The length of Mido's contract at St Andrews is believed to have been another stumbling block to the deal going ahead.
It is a big blow for Bruce who wanted Mido to supplement his current strike force of Olivier Kapo, Garry O'Connor, Cameron Jerome, Rowan Vine and Mikael Forssell.
Now Bruce admits he will start to turn his attentions elsewhere although speculation he may try to sign released Portsmouth striker Andy Cole, who spent the end of last season on loan at St Andrews, is wide of the mark.
But he is still hopeful of signing Mido's Spurs team-mate Hossam Ghaly -although that deal has also hit a few snags.
Bruce said: "You could say that both deals have been stuttering a bit - but the Mido one is a million miles away from happening.
"It's more than just personal terms. There are a few issues. It's a big blow and I have felt better. The more quality players you can sign, the better.
"It looks as if we're really struggling with the Mido deal and I might have to look elsewhere.
"As for Ghaly, it's faltering a little but I'm still hopeful of reviving that deal. I haven't given up hope."
Former Spurs defender Stephen Kelly believes Mido, who is also interesting Middlesbrough, and Ghaly would greatly enhance Birmingham's prospects in the top flight.
He said: "Mido is a talented player who has proved himself wherever he has been. He is a big strong lad, the type you can't contain. He holds the ball up, turns and has got pace.
"He did really well at Spurs and scored the goals that got us into Europe a couple of years ago.
"Hossam would also be a great addition to the squad. He can pass the ball and is not afraid to tackle."