Mr Zhao, who was in the eastern city of Hangzhou when China's paramount leader Deng Xiaoping died on February 19, sought permission to return to the capital to attend the funeral rites but Mr Jiang vetoed the plan, sources have said.
The reformist Mr Zhao, who was toppled as party chief in 1989 when the Army crushed the pro-democracy movement, had asked to return to Beijing after Deng's funeral but Mr Jiang had refused to alter his stance, sources said.
The sources, who have close ties to Mr Zhao, also said there were other signs of factional infighting at top levels of the Communist Party.
They said documents challenging Mr Jiang and purportedly written by Mr Zhao were circulating in Beijing.
Mr Zhao has denied any link to the articles, one of which is supposed to be a letter by him to the Communist Party's ruling Politburo saying that Mr Jiang should stop referring to himself as the "core" of the leadership.
"He [Zhao] has neither said anything nor asked anybody to say anything on his behalf," said one of the sources. "The motive for circulating the documents is complex," the source said, adding that other rivals of Mr Jiang could be behind the campaign attacking Deng's hand-picked successor.
A second source said: "Zhao Ziyang knows it's not time to show his cards yet."
Mr Zhao had since left Hangzhou for his old political power base, the southwestern province of Sichuan, the sources said.
"He's resting in Sichuan. He still can't come back to Beijing," one of the sources said.
Deng had eyed Mr Zhao as his successor in 1987 only to sack him two years later for sympathising with student demonstrators in Tiananmen Square.
Mr Zhao has not been seen in public since May 19, 1989 when he visited students in Tiananmen Square and tearfully called for them to end their demonstrations.
Mr Zhao was accused by his enemies of backing "counter-revolutionary turmoil" and trying to split the party.
He lived under virtual house arrest until recently at his home in Beijing. He requires permission from the leadership to travel.
Diplomats say China's current leadership remains nervous about Mr Zhao, whose liberal political and economic policies made him popular in the party and among the public.
Party officials fear Mr Zhao could be a wild card if he were to re-emerge.