Benitez has left Anfield by mutual consent after six years in charge following a difficult season. Former Reds boss Kenny Dalglish, now an academy ambassador at the club, is to assist managing director Christian Purslow in identifying a successor but no timescale has been put on an appointment.
With owners Tom Hicks and George Gillett having put the club up for sale, Dalglish himself has been mentioned as a possible short-term solution but several other names have already been touted.
Roy Hodgson and Martin O’Neill, managers of Fulham and Aston Villa respectively, are among the early favourites, as is Guus Hiddink despite his recent appointment as Turkey manager.
News that Liverpool are now seeking a new manager does not come as a surprise after a day of intense speculation on Merseyside. Benitez’s position had been the subject of recurring speculation over the past year, and particularly after a disappointing end to the 2009-10 campaign.
Parting company with Benitez brings to an end an era which began in glorious fashion with Champions League success in 2005.
Yet despite the 2008-09 season’s strong Premier League showing, no more silverware was won and the side have clearly regressed.
Benitez famously gave a “guarantee” his side would finish in the top four this year but when that failed to materialise his position began to look precarious.
Fans, a number of whom gathered at Anfield last night to protest against Hicks and Gillett, had mixed opinions over the 50-year-old, with many turning against him but a significant hardcore maintaining support.
James McKenna, spokesman for the Spirit of Shankly fans group, said: “It is not necessarily about the manager, but about how Tom Hicks and George Gillett are continuing to run this football club – they are running it into the ground.
“What has happened to the manager is the straw that has broken the camel’s back. They have got rid of him because of the financial situation.
“They always said they would back the manager. He has gone in and asked for a transfer budget but that budget cannot be provided because of the financial situation.”
Earlier Benitez had said: “It is very sad for me to announce that I will no longer be manager of Liverpool FC. I would like to thank all of the staff and players for their efforts.
“I’ll always keep in my heart the good times I’ve had here, the strong and loyal support of the fans in the tough times and the love from Liverpool. Thank you so much once more and always remember: you’ll never walk alone.”
That a compromise pay-off agreement – reported to be £6m (€7.2m) – has been reached quickly, however, will now allow Benitez to seek immediate re-employment elsewhere.
Benitez, linked with Real Madrid and Juventus in recent months, is being tipped as a potential successor to Jose Mourinho at European champions Inter Milan.
Chairman Martin Broughton said: “Rafa will forever be part of Liverpool folklore after bringing home the Champions League following the epic final in Istanbul, but after a disappointing season both parties felt a fresh start would be best for all concerned.”
Former Liverpool defender Mark Lawrenson believes Dalglish would be the perfect man to take over in the interim. “I would have thought Kenny would be heavily involved and quite rightly so – maybe not just in choosing the manager but holding the fort in the meantime,” Lawrenson said.