The Catalan giants will do battle against Napoli in the knockout round play-offs after finishing third in their UEFA Champions League group.
Rules for the tournament state a club is only able to register three new players for the knockout round, but Barcelona made four signings in January.
Xavi opted to register Pierre-Emerick Aubameyang, Ferran Torres and Adama Traore, leaving out the 38-year-old defender who is now only able to play in LaLiga.
"I feel bad," admitted Xavi in his latest press conference.
"I had to choose and I kept him out because I considered that the position of full-back has better cover than the others.
"I had to be unfair to someone and it has been Dani. He gives us a lot inside and outside of the pitch and I am sure that he will continue doing that."
