The Tottenham midfielder came off in England’s opening World Cup match – a 2-1 win over Tunisia – and was subsequently rated doubtful for the Panama game in Nizhny Novgorod.
Southgate has now officially confirmed Alli will sit the game out after informing his players of the starting XI to play Panama.
“This morning he followed the exact programme we had planned,” Southgate said of Alli.
“He started training with the rest of the group and then did some more running on his own, so he’s progressing really well.
“We’re really pleased with where he is at, but he wouldn’t be ready for the game.”