O'Neill tendered his resignation, which has been refused, to the Norwich chairman Robert Chase at 11.30 yesterday morning and would appear to be set now to be installed at Filbert Street as the successor to Mark McGhee. A week ago McGhee also tore up his contract to become the new manager at Wolves.
The surprise move followed weeks of disharmony between manager and chairman over O'Neill's desire to improve his promotion-challenging squad. He was angry when his efforts to sign the former Hull goalscorer, Dean Windass, for pounds 750,000 were denied. Chase in turn was furious that his authority was being questioned through the local media.
A Norwich statement issued just before yesterday's game said: "We regret to announce that team manager Martin O'Neill has today tendered his resignation which is not being accepted. His two-year contract still has 18 months to run." Chase later added he was "shocked and disappointed" by O'Neill's decision saying: "I was aware on Saturday that he was unhappy."
During a dramatic afternoon at Filbert Street rumours spread that the Leicester chairman, Martin George, was meeting O'Neill after the game, but they were unsubstantiated. All of which was news to the former Norwich manager Mike Walker, who had been hoping the occasion would see his appointment as McGhee's successor. Walker had been interviewed for the job on Friday and was at the ground yesterday in his role as a television summariser.
O'Neill was approached by Leicester a year ago in the wake of Brian Little's defection to Aston Villa. At the time, he turned them down, preferring to wait and see if he could guide Wycombe to a second successive promotion.
Nevertheless he and George remained on good terms. Significantly in yesterday's match programme O'Neill gave a hint of the working problems he saw at Norwich. Commenting on McGhee's situation at Leicester and before his departure from Norwich, O'Neill said: "It was not as if he had a fall- out with the board, it was not as if he was at loggerheads with the chairman in terms of not being able to do what he wanted.
"In fact looking at the club from afar it looked as if he was given the freedom to run the club how he wanted and I'm sure the club was healthier because of that."
Walker said later: "As far as I'm concerned nothing has changed. I have read that I was favourite for the job but it was news to me. I was told to expect a decision on Tuesday or Wednesday and I presume that's still the case.
"Does Martin O'Neill's resignation have an impact on the Leicester situation? It may well do, but that's for him to say."
George, the Leicester chairman, refused to make any comment throughout the day.
O'Neill's assistant, Paul Franklin, was hastily put in charge of the Canaries, who put their problems aside by taking the lead in 65 seconds through Darren Eadie. They doubled it in the 32nd minute via Robert Fleck.
Eight minutes before half-time Mike Whitlow drilled home a thundering free-kick to set up a grandstand second half in which Iwan Roberts headed a 67th-minute equaliser. That followed a cross from Leicester's 17-year- old substitute, Emile Heskey, and 11 minutes from time the youngster seized on Robert Ullathorne's short back-pass to give Leicester a victory and third place in the First Division.
Leicester City (4-4-2): Poole; Hill, Carey, Walsh, Whitlow; Taylor, Rolling (Heskey, 64), Corica; Robbins (Joachim, 82), Roberts. Substitute not used: Smith.
Norwich City (4-4-2): Gunn; Poulston, Newsome, Prior, Bowen; Carey, Milligan, Bowen, Eadie (Adams, 9); Fleck (Scott, 68), Ward. Substitute not used: Marshall.
Referee: T Heilbron (Co Durham).
Bookings: Leicester: Carey, Walsh. Norwich: Ward.
Man of the match: Taylor.