The Magpies' hierarchy had hoped to persuade the 65-year-old former Leeds United and England boss to join a club sinking rapidly into the mire following Kevin Keegan's resignation.

However, after two days of talks, Venables, who performed a similar role alongside Bryan Robson at Middlesbrough during the 2000-01 season, and the club could not agree terms.

It is understood the Londoner rejected the offer of a game-to-game deal, but was prepared to discuss a longer-term involvement. But when it emerged last night that no agreement had been reached, Newcastle had little choice but to look elsewhere.

Venables is one of a series of candidates to have been linked with the role – Glenn Hoddle, another former Leeds manager David O'Leary, Kenny Dalglish and Alan Curbishley are among the others – and it is believed that there is at least one leading alternative.

Venables took some persuading to join Robson at Boro and later twice turned down the chance to become manager in his own right at the Riverside, citing his business interests as one of the main reasons.

Newcastle owner Mike Ashley has shelved plans to appoint a permanent replacement after considering Paul Ince, Gus Poyet and Didier Deschamps among others, because his efforts to sell the club after just 16 months are ongoing.

Investment bankers Seymour Pierce are currently looking for buyers with Chris Nathaniel, spokesman for the Nigerian consortium linked to the club in recent days, insisting they are serious.