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Ancelotti expects Terry to be fit to face Everton

The Chelsea captain John Terry is in line for a return to the first team against Everton on Saturday after taking part in training this week.

Terry has missed the last three Premier League games with a painful nerve injury in his leg, and in his absence Chelsea have lost to Sunderland and Birmingham City, and drawn with Newcastle United. Initial reports suggested he could be sidelined for months, but in the past fortnight the injury has responded to treatment.

Chelsea manager Carlo Ancelotti is keen that Terry should be fit for the Everton game as the defender's fellow centre-half Alex has gone to Brazil to have surgery on a long-standing knee injury later this week, which will rule him out for eight weeks. Terry trained with the first-team squad on Tuesday and yesterday, and unless he suffers an adverse reaction he should return to the team on Saturday.

Ancelotti will also have Michael Essien available in midfield as the Ghanaian has served his three-match suspension for his red card against Fulham. Essien has recently been troubled by a toe injury but that has cleared up.

Frank Lampard, however, is still at least a fortnight away from full fitness, and is targeting the visit of Manchester United on 19 December for his return after a hernia operation and groin injury. Lampard has so far missed 18 games in what has become his longest spell out of action in his entire career.

Chelsea yesterday agreed terms with former assistant manager Ray Wilkins over his departure from the club. Wilkins was sacked three weeks ago, and the former England midfielder claimed his dismissal was "undoubtedly unfair" and sought legal advice from the League Managers Association (LMA).

However, both sides announced yesterday that the dispute had been "amicably resolved", with a pay-off said to be around £300,000.

Wilkins, who spent six years at the club as a player, said: "I'd like to thank the club and the LMA for ensuring a swift and harmonious conclusion." Chelsea chief executive Ron Gourlay added: "I am pleased we have come to a swift and amicable agreement with Ray Wilkins and all unresolved matters have now been settled."

The decision to dismiss Wilkins and appoint chief opposition scout Michael Emenalo as his replacement was taken by owner Roman Abramovich without the consent of Ancelotti and caused the Italian to briefly consider his position as manager.

Ancelotti's former club Milan are interested in signing Chelsea teenager Gaël Kakuta, who is out of contract in the summer. Chelsea are unable to agree terms on a new contract with the French midfielder, having offered him a four-year deal worth around £18,000 a week, well below the £60,000 a week the player wants. Bayern Munich are also keen on signing him on a pre-contract agreement in January.

Kakuta is concerned at his lack of first-team opportunities at Chelsea. His controversial arrival from Lens in 2007 led to Chelsea being banned by Fifa from signing any new players for two transfer windows. However, in February the Court of Arbitration for Sport overturned the decision and cleared Chelsea of any wrongdoing.