Chelsea target Andre Villas-Boas is on the verge of becoming the club's new manager, BBC Sport understands.
He resigned at Porto on Tuesday having guided the club to a domestic double and the Europa League last season.
Porto have received the outstanding £13.3m compensation detailed in the termination clause of Villas-Boas's contract, paving the way for a move.
Chelsea, who sacked Carlo Ancelotti in May, confirmed their interest and are discussing terms with the 33-year-old.
"We hope to reach agreement with him on personal terms and make a further announcement in the near future," a Chelsea club statement read.
In a statement from Porto, the Portuguese club said Villas-Boas had been replaced as coach by his assistant Vitor Pereira, who had signed a contract for two seasons.
Porto president Jorge Pinto da Costa admitted he was not surprised by the departure of Villas-Boas and said: "When he went to spend a weekend in London a month or so ago, I spoke to Vitor Pereira and asked him if he would be ready to take over. He told me he was and I was relieved.
"Last Friday, I warned him it was about to happen. What has happened is part of life and of football. We accept it."
Villas-Boas was one of a several coaches linked with Chelsea after Ancelotti was dismissed following a season that produced no silverware, although the London club finished as runners-up to Manchester United in the Premier League.
Among the other candidates touted as possible replacements for the Italian were Turkey coach Guus Hiddink and former Fulham, Manchester City and Blackburn boss Mark Hughes.
Ray Wilkins, former assistant to Ancelotti at Chelsea, feels Villas-Boas could face a difficult challenge with some of the club's senior players were he to take charge.
"Let's give the young man a chance, he's obviously done exceptionally well," Wilkins told Sky Sports. "His man-management skills from what I can read from the players he has worked with have been first-class.
"That will be required at Stamford Bridge because these are big players, big guys, very nice men I've got to say, and it will be very interesting to see how this young man goes on."
Former Chelsea boss John Hollins believes Villas-Boas could prove to be a shrewd acquisition for the west London club, who are yet to realise owner Roman Abramovich's dream of winning the Champions League, and were beaten in the semi-finals by Manchester United last season.
"He could be fearless," Hollins told BBC Sport. "It will be fresh for the players, they need a boost. I think it could be a breath of fresh air, bringing in a fresh approach to this maybe tired football team.
"This guy is as young as some of the players are so he will be on the same wavelength with them, but is it going to be a three or four year programme as opposed to having to win something in his first year? That is the one thing we don't know yet, but he has won three competitions in Portugal just like that so he could be a whizzkid.
"It's a gamble but I think it's calculated gamble. I still don't know if Mr Hiddink will be coming as an advisor to the young man, if he does that will only strengthen the position."
Under Villas-Boas, Porto won both the Portuguese league and league cup last season, as well as the Europa League.
They were unbeaten in the league, with 27 wins in 30 matches, becoming only the second Portuguese club to complete a league campaign without losing a game, after Benfica in 1972-73.
A scout for compatriot Jose Mourinho at Porto, Chelsea and Inter Milan, Villas-Boas began his managerial career with Portuguese club Academica in October 2009.
Academica were winless and bottom of the first division at the time but finished the season in 11th place.
They also reached a Portuguese League Cup semi-final before Villas-Boas left to take over at Porto in June 2010.
Villas-Boas, who speaks fluent English, also worked with Sir Bobby Robson during the former England manager's spell in charge of Porto.
