Italy coach Roberto Donadoni looks set to get the sack after it emerged today that his two-year contract renewal depended on him leading the Azzurri to the semi-finals of Euro 2008.

The former AC Milan midfielder agreed a contract extension prior to the tournament but it now appears his side's elimination on penalties by Spain in the quarter-final will cost him that lucrative deal and waiting in the wings is World Cup winning coach Marcelo Lippi.

The appointment of Lippi would see the veteran manager take on the elder statesman of Italian football, Giovanni Trapattoni, when the Azzurri meet the Republic of Ireland in the qualifiers for South Africa 2010.

A decision on Donadoni's future must be made by July 2nd, accroding to Italian football federation (FIGC) president Giancarlo Abete.

"The contract features an automatic two-year renewal in the case of reaching the semi-finals, which unfortunately did not happen," Abete said today.

"Otherwise the parties have 10 days after elimination from the European Championship to assess whether to continue with the contract. If I decided not to keep the coach I would not have to proceed with a dismissal."

Crucially, for Donadoni and the FIGC, this latter point means Donadoni will receive no compensation if he loses his job.

It had been rumoured FIGC would pay six months salary, an estimated €550,000 to terminate the contract extension the coach signed ahead of Euro 2008.

However, Donadoni claims he had asked for the compensation package to be taken out of the deal.

"I said 'no' to the proposal the president made me on the day of renewal," he told La Gazzetta dello Sport. "I'm not interested in the economic side of things. If I'm no longer the coach for him I'll go without asking for anything."