Derby County are understood to have identified Paul Jewell and Paul Ince as their favoured candidates to succeed Billy Davies. The increasingly combustible relationship between Davies and his employers ended yesterday morning during a meeting with Adam Pearson, the club’s chairman.

Both parties agreed that Davies’s departure after 18 months at Pride Park, a period in which he led Derby back to the top flight via the play-offs, was “by mutual consent”.

His exit, however, followed a rant from Davies after Saturday’s home defeat by Chelsea. The Scot urged the Derby board to release funds to strengthen the squad during the January transfer window, days after saying that he wanted six new players. He also claimed that he had not met Pearson in three weeks and that the fans were being short-changed.

Pearson, who was appointed chairman four weeks ago, is determined to ensure that the club do not experience a recurrence of their recent financial problems that put them more than £40 million in debt. He said of Davies: “We’ve talked regularly on the telephone and had our last formal meeting about ten days ago. That’s not really what this is about. It’s about an investment issue that keeps cropping up. Things came to a head this weekend. I had a good and positive conversation with Billy and this has been a genuinely mutual [decision]. It’s in the best interests of Billy and Derby that we move forward.”

Whoever heads that new structure will take on a team rooted to the foot of the Barclays Premier League after winning only one of their 14 games and who are favourites to make an immediate return to the Coca-Cola Championship.

The odds on Ince succeeding Davies have plummeted and prompted Milton Keynes Dons, the club he has guided to the top of League Two, to issue a statement saying: “Paul Ince is the hottest young manager in English football and it comes as no surprise that his name continues to be linked to managerial posts in higher divisions.” The statement also said that the club would not allow speculation over Ince’s future to “compromise” the start to the season that the manager and his team had made.

Ince, 40, has developed a reputation for attractive football with MK Dons, although, in saving Macclesfield Town from from dropping out of the Football League last season, Ince also proved that he is adept at the muck-and-nettles aspect of management.

Likewise Jewell, who has performed top-flight rescue acts with Wigan Athletic and Bradford City. The 42-year-old recently turned down the chance to return to Wigan, but on leaving the JJB Stadium at the end of last season said that he would be looking to resume work around Christmas time.

Davies is accompanied out of Pride Park by his entire management team. Nine jobs, including that of Craig Brown, the football consultant, have gone. Kevin Thelwell, the academy manager, takes charge of the team.

Ups and downs

1998 Appointed player-manager at Motherwell; at 33, the youngest top-flight manager in Scotland

2001 Sacked after three points from season’s first seven games

2004 After spell as first-team coach at Preston North End under Craig Brown, takes over first as caretaker, then full-time manager

June 2, 2006 Appointed manager of Derby

May 28, 2007 Derby beat West Bromwich Albion 1-0 in Championship play-offs final to earn promotion to Premier League