Sheffield United have launched a legal challenge over the Premier League's failure to hand West Ham United with a points deduction, just hours after their manager of nearly eight years announced his departure from the club.

The club was relegated from the Premier League at the weekend after a 2-1 defeat to Wigan and a Tevez inspired win for West Ham at Old Trafford.

After the resignation of manager Neil Warnock this morning, the club announced that it has sent an arbitration notice to the Premier League.

The Blades are aggrieved that West Ham were fined £5.5 million instead of being docked points for involving a third party in the transfer of the two Argentineans.

"We've not been playing under the same circumstances as everyone else in the Premier League. It's about time that the Premier League recognised that exceptional circumstances have occurred. The groundswell of support throughout sport is that a club has been wronged," Sheffield United chairman Kevin McCabe told reporters.

"We shouldn't have to pursue litigation. A club who've played by the rules has been relegated at the expense of one club who've fielded ineligible players. They should call us in and start to work out what needs to be done next."

McCabe suggested that one possible solution would be to retain Sheffield United in the Premier League and relegate four clubs at the end of next season.

He added that the matter was a major factor in Warnock's decision to step down as manager.

"What's happened off the field has hurt him and he goes with our blessing," McCabe said.

Earlier Warnock claimed the circumstances around the club's demise were difficult to accept.

"Sheffield United were a credit to the Premier League and the disappointing end to the season is not going to take anything away from that," he said. "I don't even feel like I've been relegated but the statistics tell us we have been."

While Warnock, who has often spoken of retirement, admitted he would be looking to get back into the game as soon as possible he said he had nothing lined up despite links to Manchester City.

"I'm looking forward now to one more challenge. (But) I can swear on my kids' lives I don't know where I'm going.

"If anything this last 12 months has given me an appetite for it.

"It will be strange taking over another club but it will be great for me. (This season) has made me drive for and want to try and get back into the Premier League in the near future.

"It's that drive that that will take me on over the next few years."

Sheffield-born Warnock had been in charge since 1999.  In the 2002-03 season he guided the Yorkshire club to the semi-finals of the FA Cup and League Cup and reached the second division play-off final.

He eventually restored United to the top flight after more than 10 years when they finished as second division runners-up in 2006.

They seemed set to retain their status in the Premier League this season when they moved 10 points above the bottom three in mid-February. However, they picked up just eight points in their last 11 games before their final-day relegation.

McCabe confirmed that Warnock's assistant Stuart McCall, widely tipped to take the helm, would be interviewed but said there were no leading candidates.

Warnock's departure continues a flurry of managerial changes at the end of the season.

Wigan's Paul Jewell resigned on Monday, a day after the club clinched Premier League survival, saying he needed a break from football and was replaced by assistant Chris Hutchings.

Manchester City boss Stuart Pearce was sacked on Monday, and Sam Allardyce, who quit Bolton Wanderers with two games of the season remaining, took over at Newcastle United on Tuesday.