Harry Redknapp is to leave his post as Tottenham manager, the club announced this morning.
Redknapp and agent Paul Stretford spent yesterday in negotiations with chairman Daniel Levy and it became clear last night the former Portsmouth boss was close to ending his three-and-a-half-year tenure at White Hart Lane.
The 65-year-old had 12 months left on his contract and is understood to have been unhappy with Levy's failure to offer him a new three-year deal.
Levy told the Spurs website: "This is not a decision the board and I have taken lightly.
"Harry arrived at the club at a time when his experience and approach was exactly what was needed.
"This decision in no way detracts from the excellent work Harry has done during his time with the club and I should like to thank him for his achievements and contribution.
"Harry will always be welcome at the Lane."
Redknapp added: "I have thoroughly enjoyed my time at Spurs and am proud of my achievements.
"I have had a fantastic four years with the club, at times the football has been breathtaking.
"I am sad to be leaving but wish to thank the players, staff and fans for their terrific support during my time there."
Everton boss David Moyes was this morning the odds-on favourite to replace Redknapp, whose failure to secure Champions League football looks to have led to his impending departure.
Only on Tuesday Redknapp was moved to dismiss speculation he was on his way out as "an outrage".
Negotiations over a new deal for Redknapp have stalled since the start of the year when Redknapp, who guided Spurs to fourth place in the Barclays Premier League last season, was linked with the then vacant England manager's job.
In the past week Redknapp has made it known he would be uncomfortable heading into the new season without a longer deal while also defending his relationship with Levy.
It has been claimed, however, that Levy was only willing to offer Redknapp a rolling 12-month contract whereas the former Portsmouth manager is thought to have wanted a longer deal that would have made the London club his last job in management.
Redknapp did achieve Levy's goal of reaching the top four last term, but Spurs missed out on playing in the Champions League after Chelsea's penalty shootout win over Bayern Munich last month's final.
An exit may seem harsh on Redknapp but his critics point to the fact his team would have qualified directly for Europe's premier club competition had they not thrown away a 10-point lead over Arsenal towards the end of the season after a poor run of form.
On Tuesday Redknapp vehemently denied he was on his way out, though, telling ESPN: "No, I haven't resigned, and I have no idea why it is being suggested that I have resigned.
"This is an outrage; an absolute liberty for people to be putting around this kind of rumour on the internet.
"It is not true, there is not a chance I will resign. Why should I?"
The news was met with disbelief by former Spurs defender John Scales.
"I am staggered that a manager who took the club to fourth, fifth and fourth again has gone," he told The Sun.
"Even though we lost out to Chelsea at the end, it has been another fantastic season.
"We'd done ever so well and I'm bewildered by the decision."
Redknapp took charge of Tottenham in October 2008 following the sacking of Juande Ramos, with the club having taken just two points from their first eight games.
Redknapp led them to an eighth-place finish and an appearance in the League Cup final, which they lost to Manchester United.
In his first full season in charge, he guided Spurs to fourth position taking them into the Champions League for the first time.
Spurs played some exhilarating football on their way to the quarter-finals, before being knocked out by Real Madrid.
Since then Redknapp has twice failed to secure Champions League football at White Hart Lane, albeit with a touch of misfortune this season as Chelsea snatched the last available place away from them with their win over Bayern.
That capped a dramatic season for Redknapp, who underwent a heart procedure in November, was cleared of tax evasion in February and missed out on the England job in May.