Sven nears the exit door

Swede gets FA ultimatum after talking to Chelsea behind their backs

Sven Goran Eriksson was yesterday set to be issued with an ultimatum by the Football Association after the latest revelation that he has held talks with Chelsea over succeeding Claudio Ranieri in the summer. Officials at the FA, led by the chief executive Mark Palios, were due to tell the Swede that, within the next few days, he must make a public declaration of his intent to stay.

Sven Goran Eriksson was yesterday set to be issued with an ultimatum by the Football Association after the latest revelation that he has held talks with Chelsea over succeeding Claudio Ranieri in the summer. Officials at the FA, led by the chief executive Mark Palios, were due to tell the Swede that, within the next few days, he must make a public declaration of his intent to stay.

They realise it will be untenable for the England coach to continue in his post without signing the two-year contract extension that has been offered to him. His current deal runs out after the 2006 World Cup and the FA want him to sign now - and are adamant that they will not make an improved bid despite Chelsea's continued interest. The FA are offering a £500,000 increase on his £3.5m-a-year salary but even that would be eclipsed by any offer from Roman Abramovich.

The FA confirmed they had no idea that Eriksson had again met with Chelsea's chief executive, Peter Kenyon, on Thursday - just 24 hours after dining with the FA's executive director David Davies - until pictures of the clandestine gathering were published yesterday. However, they admitted that a meeting did take place.

It appears highly likely that Eriksson will now go, but a source at the FA said yesterday: "If Eriksson has not already had a conversation with Mark Palios he will be having one to discuss the situation. It is very unlikely Eriksson will not be manager at Euro 2004, but there is no doubt he misses club management, although at the same time he loves the England job."

That may be so but Eriksson could yet be forced out before Euro 2004 in Portugal. Contingency plans are in place which may involve Trevor Brooking, the FA's head of football development, taking charge temporarily along with an experienced coach such as Steve McClaren, who has worked for England before.

Ironically, McClaren, the Middlesbrough manager, is likely also to be wooed as Eriksson's assistant at Stamford Bridge. It is also possible that the Swede, who has fretted about the public and media reaction to a move to Chelsea, will decide his future lies elsewhere, like Real Madrid and Internazionale. Eriksson says offers are on the table from clubs around Europe.

The timing is damaging for both England and Chelsea. Eriksson, 56, who was at Charlton Athletic yesterday and will be at Highbury today, last night named his squad for Wednesday's friendly against Sweden and the FA will be aware that speculation over his future will dominate preparations.

But Ranieri was not letting the intrigue worry him. He said in a statement yesterday: "I am most definitely not talking to any other football club. All I'm doing at the moment is focusing on trying to do my best for Chelsea this year."

Eriksson was first offered Ranieri's job as head coach last June although, after he was caught sneaking into Abramovich's home, he claimed that he had simply been "taking tea". And last month Eriksson maintained he was "amazed and surprised" at the continued rumours linking him with Chelsea. Nevertheless suspicions have remained and Palios was angered by the latest photographs prompting his decision finally to confront Eriksson.

The Swede is aware that the chance to take over at Chelsea is unique, making him the best-paid manager in the world with almost unlimited funds to spend. If he has said 100 times "no" when challenged about the Stamford Bridge job, it was 100 times "yes" for Chelsea yesterday against Wolves as Frank Lampard marked his 100th consecutive Premiership start with the goal that made it 2-2 before the substitute Jimmy Floyd Hasselbaink scored a hat-trick that included his 100th Premiership goal to wrap up a 5-2 win.