Walter Smith is on the verge of resigning after another row with Everton's chairman Peter Johnson. The manager is expected to announce this morning that he is to leave the club only five months after being installed as the successor to Howard Kendall.

Unless Johnson makes a public statement accepting full responsibility for the controversial sale of Duncan Ferguson to Newcastle last Monday, Smith will almost certainly tender his resignation and walk out. His assistant Archie Knox may leave with him.

Although Ferguson's £8 million transfer was negotiated and ratified without Smith's knowledge or consent, Johnson has so far steadfastly refused to confirm as much.

Since the chairman agreed to sell Ferguson in an attempt to reduce Everton's mounting overdraft he has held at least two, possibly three, meetings with Smith in the hope of placating the former Rangers manager.

During the last one, held in London on Friday evening, Johnson agreed to issue a statement which would in essence have confirmed that Smith was not involved in the sale of Ferguson, a cult hero at Goodison. However, much to Smith's disgust, Johnson has so far failed to issue any form of explanation.

Johnson's decision to offload Ferguson has sparked such anger on Merseyside that Johnson, the multimillionaire businessman, is known to be seriously considering his future within football.

If Smith does stand down, Everton will almost certainly install the club's veteran captain Dave Watson as caretaker manager once again.