The 23-year-old Republic of Ireland international was on Teesside for a medical yesterday before agreeing a four-year deal which will keep him at the Riverside Stadium until 2003.
Bryan Robson, the Middlesbrough manager, was delighted with his new acquisition, who at one time was valued at around pounds 4m. "Keith is strong and very quick," he said. "He is also a useful utility player in that he is equally at home wide on the left or at centre-forward.
"Given a good run, we feel he has the ability to become an excellent player because pounds 700,000 for a player of his ability and potential is a great price, considering Norwich turned down a pounds 4m bid from Newcastle a couple of years ago."
O'Neill would have been out of contract at Carrow Road at the end of the season and could have moved abroad on a free transfer under the Bosman ruling. His arrival at the Riverside ends Robson's search for an out-and- out winger, and suggests that he could be prepared to abandon his five- man defence.
Robson almost signed the Northern Ireland international Keith Gillespie from Newcastle last summer until a medical scuppered the deal.
O'Neill, who made 86 appearances for Norwich over five seasons, scoring 10 goals, will be unveiled at a press conference at the club's Rockliffe Park training ground today.
His signing follows other positive news for Robson, who saw the striker Alun Armstrong confirm his return to fitness with a hat-trick for the reserves on Wednesday night. Both could be included in the squad for Saturday's trip to Nottingham Forest, although it is unlikely that either will make the starting team.
Manchester City are set to sign the Dundee United forward Alex Mathie to help with their push for promotion from the Second Division. The former Ipswich striker has endured a miserable time since arriving at Tannadice Park and the United manager, Paul Sturrock, is looking to cut his losses. However, with City still in financial trouble, Sturrock may be forced into a player-exchange deal.
Sunderland are to screen Saturday's home game with Bolton at the city's Crowtree Leisure Centre after tickets for the First Division match sold out earlier this week.