The action came as rumours circulated that another English athlete had failed a drugs test.
Tony Ward, spokesman for the British Athletic Federation, said: 'We were aware that she was returning home. I cannot confirm or deny anything further.'
Caroline Searle, spokeswoman for the England team, said: 'She has received some bad news from home of a personal nature.' Her grandmother died on Monday.
The federation is holding a press conference in London this morning to 'discuss drugs-related issues'. Peter Radford, the federation's executive chairman, has cancelled a flight to the Games to be at the conference.
Modahl has been one of Britain's top half-milers since 1985. She won a silver medal in the 1986 Commonwealth Games in Edinburgh, and was fourth in last year's World Championships in Stuttgart. This season she won the European Cup 800m for Britain. She is the former English record holder with a personal best of 1min 58.65sec. Modahl is coached by her husband, Vicente, a Norwegian whom she married after the Barcelona Olympics two years ago. He said: 'I have absolutely nothing to say. Obviously Diane is disappointed about not being able to defend her title.'
On Tuesday, the shot-putter Paul Edwards admitted there was a problem with a test he had taken during the European Championships in Helsinki but denied he had ever used drugs.
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