Sven-Goran Eriksson has confirmed he has held negotiations with officials from Benfica as he ponders his next step after his impending dismissal from Manchester City.

The latest revelations come after Thaksin Shinawatra, the club's owner, told Eriksson that he did not believe he is the man to take the club forward and would look for a new manager in the summer. Eriksson's future has been uncertain for some weeks but the news that three officials from Benfica flew to Manchester to speak to the former England head coach confirms what fans have feared.

"I've had a meeting with the Benfica people" Eriksson said. "I'm considering the offer and it could be a step forward in my career. Let's see what happens."

Rui Costa, the veteran Portuguese midfielder who played under Eriksson, was also at the meeting. He is expected to become Benfica's director of football when he retires next week.

Through his right-hand man, Taweesuk “Jack” Srisumrid, and a Brazilian intermediary, Thaksin has already made an offer worth £3.2 million a year to Scolari, who has been told to make his decision before leading Portugal into the European Championship finals next month. Scolari’s spokesman, Acaz Fellegger, said last night that the 59-year-old’s future “will only be decided after the Euro tournament”, a stance that could prompt City to look elsewhere.

Speaking at a golf tournament in Beijing yesterday, Thaksin declined to discuss Eriksson directly and even made light of his recent criticism of the team’s performance, but he could hardly be said to have issued a vote of confidence as he repeated his mantra that he would review the manager’s position at the end of the season.

“They are all – Sven, Scolari, [José] Mourinho – great coaches, great managers,” Thaksin said. “During the season, we may complain for improvement, but that’s normal for every club. But we will discuss at the end of the season what needs to be changed and what needs to be added at the club.”

From the moment he held talks with Thaksin on April 27, though, Eriksson has been in no doubt that he will be replaced at the end of the season and has already begun to plan for life after City, as his agent, Athole Still, said last week that he would have to. It remains unclear, however, whether the 60-year-old would be tempted by a return to Benfica, where he has had two successful spells, between 1982 and 1984, and then from 1989 to 1992.

The Lisbon club have had a wretched campaign and are struggling to qualify for next season’s Champions League, forcing them to look for a replacement for Fernando Chalana, the coach. Car-los Queiroz, the Manchester United assistant manager, was another potential target, but he is thought to be eager to stay at Old Trafford.