Byrne has been ruled out of the Ospreys' EDF Energy Cup semi-final with Gloucester this weekend and remains a major doubt for the Heineken Cup quarter-final against Munster at Thomond Park on 12 April.
The 28-year-old Welshman now faces a fight for fitness to be named in the Lions touring party with coach Ian McGeechan confirming yesterday that he will name his squad for South Africa just nine after the Heineken Cup weekend..
Ospreys coach Sean Holley said: "It's not good news. Lee had a scan which confirmed inflammation of the tendon.
"We do not know the full extent of the injury yet and we're seeking further medical opinion but it's a hammer blow to lose the best full-back in the world this weekend.
"We hope to hope he will make the Munster game but the prognosis isn't brilliant. We don't think it will affect his Lions hopes but we just don't know - we'll just have to wait and see."
Byrne faces stiff competition for the Lions No 15 jersey from not only Grand Slammer Rob Kearney, but also England's Delon Armitage.