Fulham are preparing to move Roy Hodgson upstairs and make John Collins their fourth manager in a year. Hodgson arrived at the club three months ago, but he has been unable to stop their slide towards the Coca-Cola Championship.

Defeat away to Reading on Saturday would leave the club with one foot in the second tier and pave the way for Collins, the former Hibernian manager, to return to Craven Cottage. Hodgson will be offered a role as the club's director of football.

Collins made a big impression at the club as a player between 2000 and 2003 and almost got the nod ahead of Hodgson when the club were looking for a new manager last December. With the team in the relegation zone, Mohamed Al Fayed, the chairman, opted for experience in the shape of Hodgson. But Fulham have won only twice in 13 league games under the former Inter Milan and Blackburn Rovers manager and are six points away from the safety of seventeenth place with five matches to play.

Instead of waiting until the summer to replace Hodgson, Fulham will start talks with Collins this week, with a view to announcing his appointment when and if they are relegated. Hodgson and his players were booed off the pitch after the 3-1 defeat at home to Sunderland on Saturday and the board believes that by acting quickly, it will boost season ticket sales for next season and give the team the best chance of returning to the top flight at the first attempt.

Collins, 40, left Hibernian under a cloud by resigning last December, a day before Lawrie Sanchez was dismissed by Fulham. He claimed that he was leaving because he had taken the Clydesdale Bank Premier League club as far as he could with the resources available, but, despite winning the Scottish League Cup, the club's first trophy in 16 years, his time at Easter Road was marred by player unrest and rumours of a dressing-room mutiny.

Fulham want Hodgson to stay as the director of football because they are impressed with the work that he has done behind the scenes - primarily in revolutionising training sessions - and because of the contacts he has made during a coaching career that has lasted 32 years and taken in 16 positions in eight countries. Hodgson has stated in public that he wants to keep his job if the club are relegated, but some directors fear privately that his technical approach to coaching may not be suited to the blood and thunder of the Championship.

Relegation would cost Fulham, who spent £25million on players last summer under Sanchez and an additional £10million during the January transfer window, about £45million. The last time the club took the dreaded drop, it was 33 years before they returned to the top flight and Al Fayed is so desperate to be back in the Premier League as soon as possible that he is contemplating waiving the club's contractual right to reduce some of players' wages if they are relegated.

It has become standard practice for clubs to insert clauses into players' contracts that allow them to cut their wages by up to 50 per cent after relegation. The club are hoping that, with Collins in charge, Hodgson in the background and with a first-team squad on Premier League wages, they will be back in the top flight within 12 months.