Blackburn pulled out, claiming there were question marks over the full- back's fitness, but Keegan believes Blackburn's loss is Newcastle's gain and said: "Robbie is going to re-sign here on a two-year deal. We've got to talk to his agent but it's virtually agreed."
Keegan criticised Blackburn's attempt to buy the pounds 3.5m-rated Elliott on the cheap. "The so-called substantial offer Blackburn made us was pounds 1m. It may be substantial for Blackburn but it's not for us.
"I would have thought the whole thing would have been disappointing for Robbie but he is coming back to a bigger club, that's for sure and I'm just delighted to have him back. I would have had to have sign another full-back to put John Beresford under pressure if Robbie had gone."
Keegan will put Elliott straight into his squad for today's opening Premiership match against Everton at Goodison Park.
Keegan will be forced to make at least one change from the side which beat Anderlecht in midweek because Faustino Asprilla is suspended, but David Batty, who did not train yesterday, is fit.
Brighton have been found guilty by an FA Discipliniary Commission of failure to control their crowd after trouble flared in April. An FA Disciplinary Committee yesterday met with the Brighton chief executive, David Bellotti, at the Goldstone Ground following the riot that led to Albion's home match against York City being abandoned on 27 April.
The Third Division club have had three championship points deducted and have also been ordered to play one match behind closed doors. Both penalties are suspended until the end of the coming 1996-97 season.
But they will be enforced, in full or in part, if there is any serious incidents of misconduct involving Brighton supporters either at home or away.Reuse content