Detailed plans are being prepared to oust Sir Ian Blair from his position as head of Scotland Yard in an attempt to halt the collapse of morale in the Metropolitan Police. Ministers, senior officials and leading police chiefs have secretly discussed arrangements for replacing the embattled commissioner by the end of this year.

The Times has learnt that the first step will be taken this week when Sir Ian is told formally, in writing, that his contract will not be renewed when it expires in February 2010.

The plan envisages Sir Ian staying in the post to act as a “lightning conductor” for criticism of the Met at the inquest into the death of Jean Charles de Menezes, which opens this month. He would then be approached to stand down in the best interests of the force.

One senior source said: “The grey suits are gathering. Ian has already been asked to consider whether his staying in the job is damaging the Met. The infighting at the top of the Yard is sapping the morale of the men and women doing the job on the street.”

The news that a decision has been taken not to renew Sir Ian’s contract will trigger an open race for his job. The post is the most coveted in British policing: leading the 35,000-strong Met, fulfilling national counter-terrorism and royalty protection roles and preparing for the London 2012 Olympics.

Sir Ian, 55, hoped to be commissioner during the Olympics but his leadership, which has been dogged by controversy, has become increasingly precarious in recent years, with three serious challenges to his authority over the summer.

Assistant Commissioner Tarique Ghaffur has accused him of racial discrimination and started employment tribunal proceedings. Sir Ian is also at the centre of an inquiry into allegations that he influenced the award of police contracts to a close friend.

The inquest into the death of Mr de Menezes, who was shot seven times in the head after being mistaken for a suicide bomber at Stockwell, South London, in July 2005, is expected to be hugely damaging for the Met. A well-placed source said: “He has become the issue. There comes a point when fairness has nothing to do with it and what matters is the integrity of the organisation.” Should Sir Ian, who has described himself as “a bit of a limpet”, resist an approach to step down he could be removed. The Police Act 1996 states that the Metropolitan Police Authority (MPA) and the Home Secretary can call upon the commissioner “to retire in the interests of efficiency or effectiveness”.

Sources have told The Times that Jacqui Smith consulted on sacking Sir Ian last year after the Met was convicted of breaching health and safety laws in the operation that led to Mr de Menezes’s death. The Home Office backed away from the idea, not wanting to be seen to bow to opposition calls for Sir Ian to quit.

Sir Ian was also able to point to falling crime figures in London, but that argument is severely weakened by the series of teenage murders.

Under the plan, the Deputy Commissioner, Sir Paul Stephenson, would become acting commissioner. The commissioner will be chosen by Ms Smith, but she must consult the authority, which will soon be under the control of Boris Johnson, the Conservative Mayor of London.

A number of senior officers outside London are regarded as qualified for the role. Sir Hugh Orde, Chief Constable of Northern Ireland, Sir Norman Bettison, police chief in West Yorkshire, and Bernard Hogan-Howe in Merseyside would all be expected to compete for the post. An acting deputy commissioner would be chosen from within Scotland Yard. Assistant Commissioner John Yates, who led the cash-for-honours inquiry, is well placed, but he would have to leapfrog over more senior colleagues.

A spokesman for the authority said that discussions over Sir Ian’s contract were confidential. “The MPA writes to serving chief officer ranks 18 months prior to the culmination of their existing contract to seek their views on extending that contract. In the case of the commissioner, who is a royal appointee, the views of the Home Secretary will also be sought. We are in the process of writing to the commissioner and the Home Secretary.”

A spokesman for Scotland Yard said: “The commissioner still has 18 months to run on his original contract and has had no discussions with anyone about this being extended. He has received no correspondence on this matter.”

Leaked e-mails obtained by The Times in July revealed that senior MPA officials had discussed pressing “the nuclear button” over the commissioner’s position after the emergence of the contracts controversy.

Sir Ian joined the Met in 1974 after studying English at Christ Church, Oxford. He had entertained childhood dreams of being a doctor and undergraduate ideas of becoming an actor but decided to become a policeman.

He progressed quickly through the ranks, wrote an influential book on the investigation of rape cases and by 1988 was a superintendent. He became deputy commissioner in 2000 and commissioner in 2005.

Times Recommends

• The bright side of this winter rain
• Story behind the picture: Snow Leopard, 2008
• Times Charity Appeal: The Place2Be