Inter Milan president Massimo Moratti admitted he lost patience with Rafael Benitez after the Spaniard demanded money to spend in the January transfer window.
But he remained tight-lipped over the identity of Benitez's successor with former AC Milan boss Leonardo reportedly set for the post.
The Serie A side confirmed this afternoon an agreement had been reached over the termination of Benitez's contract. Talks had been ongoing between the former Liverpool coach's agent and the Inter hierarchy to find a resolution.
"I'm sorry the relationship with Benitez is over, but the split had now become inevitable," ANSA quoted Moratti as saying.
With Benitez back in Liverpool, his agent Manuel Garcia Quilon met yesterday with Inter vice-president Rinaldo Ghelfi and technical director Marco Branca, as well as the club lawyer Angelo Capellini in a bid to thrash out a compensation package.
Benitez's future at the San Siro had looked bleak since he appeared to issue an ultimatum after leading Inter to success in the FIFA Club World Cup on Saturday.
The Spaniard called for Moratti to back him in the upcoming transfer market after an otherwise poor start to the season, which has left the Nerazzurri well off the pace in the league, or dispense with his services.
The Inter president said in Gazzetta Dello Sport: "Maybe I was not very satisfied, regardless of the statements (from Benitez), up to the success in the Club World Cup, but then after the statements of the coach I no longer had any desire or patience to get on with it.
"If he had not made those statements would he have remained? I don't know."
Brazilian Leonardo, who had two spells at Inter's great rivals Milan as a player and also served as technical director and last season as coach of the Rossoneri, is widely expected to be appointed to replace Benitez.
But Moratti was giving little away.
He said to ANSA: "All the names that circulate about the next Inter coach are interesting."
Asked if it would be Leonardo, he told reporters: "We'll see, I will tell you when we decide.
"All the people we have in mind are experienced, brave and intelligent. However, when the time comes we'll tell."
Asked if former Inter and Italy goalkeeper Walter Zenga, currently in charge of Saudi Arabian club Al-Nassr, was also a candidate, he said: "We'll see."
Despite his time at the San Siro turning sour so quickly, Benitez does not bear a grudge against his former employers.
"I want to thank everyone for the support received during my experience at Inter," ANSA quoted Benitez as saying.
"I want to thank personally and on behalf of my staff, players, employees of the club and fans who have placed their trust in us.
"The two titles we won were the result of the commitment of all those who have been on our side, maintaining the basic principles of professionalism, education, respect and dedication to the club.
"Regardless of the sadness that is natural when you leave a big club like Inter, we take with us the joy of the memories of the fans who welcomed us after winning the Club World Cup.
"I would also like to greet the players, staff and employees who, because of the holiday period, I can personally greet in the coming days. I wish all of them, as well as the club and the fans, the greatest sporting success for the future.
"Finally, it is incumbent on my part to thank president Massimo Moratti for choosing me as coach."
The five-time reigning Serie A champions sit seventh in the 2010-11 table while they only qualified second in their Champions League group behind competition debutants Tottenham.
Inter's season has been undermined by injuries, but with a 13-point gap to make up to leaders and city rivals Milan Benitez came under intense fire just six months into the job.
Benitez always had a tough task in succeeding Jose Mourinho, who led Inter to the Serie A, Coppa Italia and Champions League titles last season before leaving for Real Madrid in the summer.
Injuries to key personnel like Wesley Sneijder have not helped his cause, but the Nerazzurri have won just six of their 15 league games this term.
They lie closer to the relegation zone than the top of the standings.