Harry Redknapp departs Tottenham as Daniel Levy relationship turns sour

Rejected ultimatum over new deal leads to manager's exit following Champions League disappointment

Harry Redknapp has parted company with Tottenham Hotspur after a tumultuous few days in which he gave chairman Daniel Levy an ultimatum that either he was awarded a new contract to replace his pre-existing deal, that had one year remaining, or he would leave the club.

Levy refused to give Redknapp the new contract he wanted and the two parties announced the 65-year-old's departure from the club this morning. Last night, sources close to the two men said that the relationship was irrevocably damaged and Redknapp's representatives were understood to be negotiating a severance package with Levy.

The Everton manager, David Moyes, one of those under consideration for the job, is understood still to be on holiday in America. He is planning to be in Poland next week to watch the European Championship. It is not anticipated that there will be an immediate announcement on Redknapp's successor.

The Spurs chairman has been through a difficult few weeks in which he has lost his mother, which was acknowledged by Redknapp during his appearance as a pundit on the BBC's Euro 2012 coverage last week. While Redknapp has constantly sought assurances that he would be awarded a new long-term deal before the start of the season, Levy has been less keen to forge ahead with a new contract.

Levy was prepared to discuss the situation with Redknapp but the latter regarded the reticence on his chairman's behalf to agree a new deal as a sign that he was no longer wanted at the club. Levy regarded the failure to qualify for the Champions League – fourth place was not good enough after Chelsea won the competition – as a major disincentive to giving Redknapp a new contract.

The Spurs chairman was open-minded about allowing Redknapp another year in the job and then discussing his future when he was out of contract next summer. However, that was considered inadequate by Redknapp, now represented by Paul Stretford, the agent of Wayne Rooney.

Although Redknapp and Levy have always been characterised as the odd couple – one a gregarious, outspoken public figure, the other a publicity-shy businessman who runs Spurs with a scrupulous eye for detail – they did not get on badly all the time. The problem was the original contract that Redknapp signed in October 2008.

In that deal, agreed hastily with Spurs then bottom of the Premier League, there were no conditions agreed upon which Redknapp would be entitled to a renegotiation of his own terms. It meant that Levy was not obliged to offer him an improved salary package and over time resentment festered that the Spurs chairman was not prepared to reward Redknapp for the team's success.

The end-of-season slump, in which Spurs won just five of their last 14 league games following Redknapp's acquittal on tax evasion charges did not strengthen the manager's hand in negotiations this summer. Nevertheless, he still felt strongly that being allowed to go into the final year of his contract with his future insecure was disrespectful of the club.

Since his acquittal on two charges of tax evasion on 8 February, Redknapp has missed out on the England job and now finds himself out of football. He feels resentment towards the FA over their long delay in appointing a manager, which he thought was damaging to Spurs' season. He has said in the past that Spurs would be his last job but, given his absorption with football, that is unlikely to be the case.