The conflict between Kevin Keegan and Dennis Wise was at the heart of late-night discussions at Newcastle United but, amid suggestions that the manager had issued a “him or me” ultimatum, the uncertainty continued at St James’ Park.

The power battle between Keegan on one side and Wise and Tony Jimenez, the directors, over transfer policy on the other was the main cause of the the manager walking out on Monday, seemingly for good.

Guided by the League Managers Association (LMA), Keegan stepped back from his apparent resignation and then arrived for talks with the Newcastle board yesterday with a list of demands. Control of future transfers is known to have been his priority, throwing the responsibility back on to the club.

Keegan’s greatest weapon is the support of the fans who have made clear their backing for the manager and their antipathy towards Mike Ashley, the owner. They have been threatening a boycott of the next home fixture against Hull City a week on Saturday if Keegan is ousted as manager.

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He can also rely on dressing-room loyalty, not that it counts for much in football. Keegan has his faults, but in sticking his neck out for various players, including Joey Barton and Michael Owen over their contractual positions, he has won the support of a squad that is being quickly demotivated by yet another boardroom fiasco at St James’ Park. The players have declined to speak out in public, presumably for fear of disciplinary measures.

In a statement on Tuesday evening, Ashley appeared to have made clear his intention to stick with the strategy of using Wise and Jimenez to vet all transfers. There were rumours on Tyneside last night that Wise had been ousted but they are thought to have been unfounded, with both directors insistent that they would be staying put.

The manager has been outraged that his wishes in the transfer market have been blatantly ignored. Players have been signed without his approval, while others, such as Barton and Owen, were hawked around to other clubs behind his back.

Such was Keegan’s disgruntlement with the situation on Monday that he told his friends and associates that he was finished with Newcastle. After heated discussions with the board, he spent much of Monday evening in discussion with lawyers and Richard Bevan, the chief executive of the LMA.

It is not yet clear whether he had second thoughts about relinquishing his long ties with Newcastle or whether he was simply seeking to protect his legal position and up to £8 million in possible compensation, but by yesterday morning Bevan was making it clear that Keegan had not resigned.

By then, Newcastle had insisted that they had no intention of sacking Keegan. The last thing that the board needs is a vacancy only a few weeks into the season and even more unrest from supporters who tend to see only the best in a Tyneside

legend who has not yet used up his credit for his playing exploits and for his first successful stint in the dugout. Bevan is understood to have taken part in talks between Keegan and the club’s hierarchy yesterday to try to resolve the impasse one way or the other.

“Both the club and Kevin would like to reiterate that Kevin remains as manager. He has not resigned nor has he been sacked,” a club statement said yesterday, although it evidently masked the hard negotiations going on at St James’ Park.

After Keegan had left the club on Monday, it was assumed that any further discussions would simply be between lawyers haggling over compensation. Continuing talks last night left the fans to hope that their hero would remain on Tyneside, although, this being Newcastle United, nothing was clear-cut.