Porto have confirmed coach Andre Villas-Boas has tendered his resignation and his contract will be terminated once his 15 million euro release clause has been paid.
The Portuguese champions made the announcement in a statement to the Portuguese Securities Market Commission and it appears to pave the way for Villas-Boas to join Chelsea.
The west London club are searching for a coach to replace Carlo Ancelotti, who was sacked at the end of last season.
The statement read: "FC Porto was today notified of the intention of Andre Villas-Boas to resign from his contract with the club by triggering the release clause immediately.
"The contract will be terminated once the required amount is paid."
Villas-Boas guided the Dragons to the domestic double and Europa League success last season.
And he is no stranger to Chelsea, having worked there under Jose Mourinho.
Villas-Boas, who was reportedly also on Inter Milan's wanted list, would dramatically increase his salary with a move back to Chelsea, with reports suggesting as much as £4.4m-a-year is on offer.
If Villas-Boas does succeed Ancelotti one of his first signings could be to bring Porto's star striker Falcao to Stamford Bridge along with him, the £25m-rated Colombian having impressed as the Dragons won the Europa League final at Dublin's Aviva Stadium, where the 25-year-old netted the only goal against Braga.
ANDRE VILLAS-BOAS FACTFILE
1977: Born in Porto on October 17.
1993: Invited to work as a trainee with FC Porto's youth-team coaches by manager Sir Bobby Robson.
1994: Achieves UEFA C coaching licence in Scotland.
2000: Takes charge of the British Virgin Islands for two international matches. Both end in defeat.
2002: Becomes part of Jose Mourinho's backroom staff at Porto.
2004: Follows Mourinho to Chelsea.
2008: Moves with Mourinho to Inter Milan.
2009: Appointed manager of Academica in October, with club bottom of the table and without a win. Villas-Boas guides them to an 11th-place finish and a Portuguese League Cup semi-final.
2010: June 2 - Appointed manager of boyhood club Porto.
August 7 - Wins Portuguese Supercup with 2-0 victory over Benfica.
2011: April 3 - Leads Porto to their 25th league title, finishing with the biggest ever winning margin over second place (21 points).
May 18 - Porto win Europa League with a 1-0 triumph over fellow Portuguese side Braga.
May 22 - Guides Porto to a trophy treble with a comprehensive 6-2 win over Vitoria de Guimaraes in Portuguese Cup final.
June 21 - Porto confirm Villas-Boas has tendered his resignation and his contract will be terminated once his 15 million euros release clause has been paid.