Manchester City could face battle with Barcelona for Manuel Pellegrini after sacking Roberto Mancini

Roberto Mancini was sacked by Manchester City on Monday night, precisely 12 months to the day after he delivered the Premier League title to the club in such extraordinary fashion.

Manuel Pellegrini, the Malaga manager, is expected to succeed the Italian, with contracts already exchanged between him and City. But though the Chilean is the clear favourite, his appointment is not a foregone conclusion and City are aware that they may face competition with Barcelona among others, amid concerns over Tito Vilanova's health problems. Pellegrini has verbally agreed to take over from Mancini once City exercise a £3.3m clause in his contract with Malaga.

Mancini is understood to have been told by Khaldoon al Mubarak on Sunday that he was sacked, with chief executive Ferran Soriano also meeting the Italian face-to-face in London on Monday night before a statement confirming the dismissal was published at 10.30pm.

Al-Mubarak called Mancini from Abu Dhabi, having approved the statement which underlined his belief that the close friendship which has developed between the two over the last three-and-half years might continue. The announcement had been delayed as City's board and owners raced to complete the 'review' process of the season, a more complex process than at some clubs, which may have entailed the involvement of Sheikh Mansour bin Zayed al Nahyan.

City admitted in the statement they had been forced to accelerate the announcement because of "recent speculation and out of respect to Roberto." They have issued it in time to prevent Mancini going through the humiliation of leading the team at Reading tonight.

The statement was significant in its declaration that City now "need to develop a holistic approach to all aspects of football at the club." If appointed, Pellegrini will seek to introduce the same technical football at all levels from youth sides to first XI, as he did at Spanish La Liga side Villarreal, and is expected to be less divisive than Mancini had become.

Mancini has been preparing for the possibility of dismissal by the club for some time. The Independent understands that he signed a pre-contract agreement with Monaco after talks about taking over for the 2012/13 season which left the French side confident that he would join them. It is unclear whether that still ties him to move to the Riviera, where his compatriot Claudio Ranieri may be replaced after the club's promotion to the country's top flight.

Monaco is his most likely destination. The club are seeking a top bracket manager to match their ambitions after promotion to France's top flight, which has already seem them close in on signing Radamel Falcao. Roma, where Mancini has a good relationship with the general manager Franco Baldini, is a less likely next destination, though Napoli is another possible candidate for Mancini's services. He will be in demand.

The future of the assistant Mancini hired, David Platt, and members of his Italian backroom team, will be decided in the coming days. With the Pellegrini discussions on-going, assistant Brian Kidd will lead the team's USA post-season trip next week. It may be next week before the Chilean's appointment is confirmed.

It was the leaking of the news about Pellegrini, late on Friday night, which persuaded al-Mubarak to speed up plans to resolve the Mancini issue. The club said on Monday night had met only one of the pre-season targets: qualification for next season's Champions League. The statement said it had been "a difficult decision for the owner, chairman and board" and the "outcome of a planned end of season review process."

Al Mubarak added: "Roberto's record speaks for itself, he has clearly secured the love and respect of our fans. He has done as he promised and delivered silverware and success."

Mancini and al-Mubarak's conversation on Sunday appears to have been cordial. Al-Mubarak flew back to Abu Dhabi on Monday and appears then to have been involved in a race to get the 'review' signed off, so allowing the formal dismissal of Mancini. The club's chief executive Ferran Soriano and sporting director Txiki Begiristain had gone to ground and may have been in discussions with Pellegrini, ahead of the announcement.

There is further evidence of the "holistic" approach in the revelation that four members of the club is parting company with four members of Academy staff including Jim Cassell - the once revered individual who managed City to triumph in the 2008 Youth Cup.

Cassell was eased aside several years ago, into a role in which he oversees the owners' international academies. But he is now to leave altogether, along with under-18s coach Adam Sadler, who wants to return to his native North-east, former City player Paul Power and head of education and coaching, Pete Lowe.

There has been a feeling amongst some players that the managerial position was in limbo, with some contractual business clearly on hold until end of season. Some have been told that kind of business will be sorted quickly at end of campaign. That the players did not sense that a change at the top was coming so imminently may be a reflection of how the owners did not anticipate the news leaking out.

City depart on Monday for their symbolically significant trip to the United States, in which they play Chelsea twice but are also present for the anticipated announcement of the Abu Dhabis' new MLS franchise.