Mr Ross, 57, left Cable & Wireless with pounds 1.3m compensation last November after a disagreement with then-chairman Lord Young, who was also ousted by the board.
Littlewoods denied the high-profile appointment meant that Littlewoods was being groomed for a stock market flotation. "That is not on the agenda at the moment," a spokeswoman said. "Mr Ross has been put forward as chairman to help develop a coherent strategy for the group and to enhance the performance of the businesses."
The Moores family which controls Littlewoods is set to formally approve the appointment at the company's annual meeting on 23 May.
Mr Ross's position will be non-executive but he will spend four days a week with the company for the first 18 months to two years while he reviews the group's complicated management structure and under-performing businesses.
Littlewoods declined to disclose Mr Ross's salary but it is likely to compare favourably with the pounds 400,000 he received at Cable & Wireless.
He will replace Leonard van Geest, who was paid pounds 225,000 in 1994. Mr van Geest, who was keen to retain his position, will receive compensation of up to pounds 450,000.
Further changes on the Littlewoods board are expected and these could include the departure of managing director Bill Huntley and finance director Jim Michie. The Moores family has only one member on the board, James Suenson-Taylor, though this too could be the subject of review.
Littlewoods is attempting to separate the management of the business from its ownershipwhere the faction-ridden Moores have often failed to agree.
The shake-up is the result of a study of the company's management structure by accountants Coopers & Lybrand. A second report on the ownership structure is yet to be acted upon. Options include selling parts of the company, a partial flotation or continuing with the existing structure.
Littlewoods has been struggling in recent years and earlier this month reported a sharp decline in profits from pounds 116m to pounds 97m which were affected by a pounds 2m charge for restructuring.
Last year the group, whose pools business has been badly hit by the National Lottery, was the subject of two pounds 1bn-plus takeover bids, one from its former chief executive Barry Dale, the other from a consortium which included N Brown the mail order company and Iceland stores. The Moores family rejected the offers.
There is speculation that the UK's mail-order business is ripe for rationalisation and that Littlewoods may choose to strengthen its catalogue business with an acquisition. Freemans, Sears's struggling mail-order business, may be a possibility.
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