After former England Manager Fabio Capello sensationally quit his post over the John Terry race row, Harry Redknapp is being hotly tipped to take over from the Italian.
The Italian’s resignation paves the way for Londoner Redknapp to take over for the European Championships this summer, with bookmakers slashing odds on the Spurs boss taking charge following his acquittal on a charge of tax fraud.
Following the FA's announcement, Bookmaker William Hill slashed Redknapp's odds to 8/15 to take over the nation's team in time for the first Euro 2012 match against France, while Coral has stopped taking bets on Redknapp becoming the next England manager.
Capello had been enraged after the FA went over his head to strip Terry of the captaincy until after his July court case where he will deny racially abusing QPR's Anton Ferdinand.
Capello told Italian TV that he "absolutely" disagreed with the action against Terry and that set him on a collision course with the FA.
Capello was agreeing to quit his £6 million-a-year post almost exactly as Redknapp walked free from court.
The FA is expected to hold a press conference at noon on Thursday.
An FA statement read: "The Football Association can confirm that Fabio Capello has today resigned as England manager."
The statement went on: "This follows a meeting involving FA chairman David Bernstein, FA general secretary Alex Horne and Fabio Capello at Wembley Stadium.
"The discussions focused on the FA board's decision to remove the England team captaincy from John Terry, and Fabio Capello's response through an Italian broadcast interview.
"In a meeting for over an hour, Fabio's resignation was accepted and he will leave the post of England manager with immediate effect."
Bernstein said the resignation was the right course of action.
The FA chairman said: "I would like to stress that during today's meeting and throughout his time as England manager, Fabio has conducted himself in an extremely professional manner.
"We have accepted Fabio's resignation, agreeing this is the right decision. We would like to thank Fabio for his work with the England team and wish him every success in the future."
Bernstein and the Club England management team will hold a media conference at Wembley at 12 noon on Thursday.
After the resignation announcement, Harry Redknapp was immediately installed as the favourite to replace him. However, the Spurs boss is contracted to the White Hart Lane club and would require consent from Spurs chairman Daniel Levy to take on the role on a part-time basis for the summer event.
Speaking to Sky News, Gabrielle Marcotti, Capello’s biographer, said: “If you were going to get rid of him [Capello] for football reasons, the time to do it was after South Africa. To do it four months before a tournament… seems completely insane."
Marcotti added: "If they want Harry Redknapp straight away they [The FA] are going to have to pay Tottenham Hotspurs through the nose.”
Following the news, #capello shot to the top of the Twitter trends, with fans, players and former players posting their reaction.
On Wednesday evening, the Football Italia website quoted Capello launching a blistering attack on the FA.
“They really insulted me and damaged my authority,” Capello reportedly said.
“What really hit me and forced me to take this decision was the fact the much-vaunted Anglo-Saxon sense of justice, as they are the first to claim that everyone is innocent until proven guilty.
“In Terry’s case, they gravely offended me and damaged my authority at the head of the England side, effectively creating a problem for the squad.
“I have never tolerated certain interference and crossing of lines, so it was easy for me to spot it and take my decision to leave.”
On Thursday night, the FA released a statement disputing the quotes posted on the Football Italia website. However, speaking to Sky News, Sky Italia correspondent Lorenzo Amuso, who works for the agency who supplied the comments to the website, stood by the report.
Under Capello England enjoyed mixed fortunes, with 28 wins, six losses and eight draws.
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