The English Football League has announced that Birmingham City's transfer embargo has been lifted but also stated that the club will only be able to sign up to five new players this summer.

The Championship club recorded losses in excess of the permitted amounts for the three-year period 2015-16 to 2017-18, the EFL confirmed.

Birmingham will now be referred to a disciplinary commission which has the power to invoke a full range of sanctions if the Blues are found in breach of Financial Fair Play rules.

Any players that Birmingham sign will be subject to a number of conditions, including a wage cap.

The Blues have also been allowed to register Danish left-back Kristian Pedersen, their only signing so far this summer, ahead of Saturday's opening league match against Norwich City.

"The EFL is exceptionally disappointed that the club entered into an employment contract with the player at a time they knew they would be subject to a business plan for 2018-19 if they were in breach," a statement said.

"The decision to allow the club to register Kristian Pedersen was taken after consideration of the legal position as between the club, player and the EFL."

Birmingham have also agreed to an EFL "business plan" in an attempt to meet the league's profitability and sustainability rules in future.