Liverpool have terminated the contract of manager Kenny Dalglish, with Wigan's Roberto Martinez favourite to replace him.
Dalglish returned to Liverpool in January 2011 as caretaker under
new owners Fenway Sports Group and was then appointed on a three-year
permanent deal last summer.
After spending £35million on Andy Carroll, he then invested a further
£80million last summer, but Premier League results have been poor and
despite a Carling Cup final success, it was their worst league campaign
since the 1950s.
The Reds lost the FA Cup final to Chelsea and ended up finishing eighth in the league, below city rivals Everton.
Dalglish told the club's official website:
"It has been an honour and a privilege to have had the chance to come
back to Liverpool Football Club as manager.
"I greatly appreciate the work that Steve, Kevin, the players and all
of the staff put in during my time and feel proud that we delivered the
club's first trophy in six years winning the Carling Cup and came close
to a second trophy in the FA Cup Final.
"Of course I am disappointed with results in the league, but I would
not have swapped the Carling Cup win for anything as I know how much it
meant to our fans and the club to be back winning trophies.