Benitez set to quit Liverpool

Liverpool have moved to bring Rafael Benitez's six-year reign as manager to a close by offering him a severance package to leave Anfield. Benitez, who has four years remaining on a contract signed at the end of last season, has been offered £3m – a fifth of the balance of that deal – to quit with immediate effect.

Although Benitez has yet to respond to the offer – and his agent, Manuel Garcia Quilon, said he knew nothing of the reports – it represents a determined vote of no confidence in the man who brought the European Cup to Merseyside from the club's newly appointed team of chairman, Martin Broughton, and managing director, Christian Purslow.

Relations between the board and Benitez had become increasingly strained following the club's failure to qualify for the Champions League and a domestic performance that in terms of league position was the worst since 1999, the first year of Gerard Houllier's term as manager. Houllier and his backroom staff were given £11m after their dismissal in 2004 and Liverpool's less generous offer to Benitez is a sign of straightened circumstances at Anfield and a gamble that the Spaniard will not sue for unfair dismissal.

Should he find immediate employment at Internazionale, succeeding his arch enemy, Jose Mourinho, any claim for loss of earnings would be weakened. Once Mourinho made clear his determination to leave the European champions for Real Madrid, the Inter president, Massimo Moratti, spoke of his admiration of Benitez, remarking: "He is a man I have admired but for the moment he is engaged." Yesterday, details of the divorce proceedings became clear.

Since Liverpool's worst season for more than a decade ended in a deflating goalless draw at Hull, Benitez, who did little to play down reports linking him with Juventus as the campaign reached its climax, publicly stated his belief that Champions League football would not return to Anfield without substantial investment. Privately, he thought that Liverpool would struggle to recover until owners, Tom Hicks and George Gillett, ended their increasingly fraught association with the club. With any potential buyer having to spend around £1bn on buying the club from the Americans, building a new stadium on Stanley Park and reconstituting a woefully underperforming side, the board concluded that there could be no room for a manager who appeared increasingly estranged from his players.

With the club £350m in debt and having posted a record loss of £55m last year, there was no leeway to bring in the "three or four quality players" Benitez demanded. A new manager – and the Fulham boss Roy Hodgson is likely to be the favourite – may be given some funds to rebuild but nothing like the sums Benitez demanded.

Despite reports in Madrid that Mourinho wants to see the Liverpool captain, Steven Gerrard, at the Bernabeu, it is unlikely that Benitez's imminent departure was triggered primarily by an internal revolt. Nevertheless, Benitez was not a popular manager in the dressing room and Gerrard, in particular, found his approach cold and unforgiving after Houllier's paternalistic warmth.

There have been doubts over the future of Fernando Torres with Broughton reported as saying that if the 26-year-old is to leave Merseyside, it might as well be now when his transfer value would be at its peak.

The presence of Torres, Javier Mascherano, Pepe Reina and Daniel Agger ensures that Benitez will leave Liverpool a better team than the one he inherited from Houllier and somehow took to the European Cup. However, his time at Anfield was one of diminishing returns and after a second European Cup final, lost to Milan in Athens, his was a club that increasingly lacked direction.

A second-place finish to Manchester United last year proved the exception and his transfer policy was summed up by the sale of Xabi Alonso to Real Madrid and the spending of £20m on a replacement, Alberto Aquilani. By the time the Italian was fit, Liverpool were out of the Champions League, the FA Cup, the League Cup and the Premier League and although the Kop never quite fell out of love with Benitez, their passion for him had long since soured.