Ancelotti was allowed to undertake his post-match press duties following the 1-0 defeat by Everton, a result which did not affect Chelsea's second‑place finish, and had expected to meet the club's hierarchy this week to discuss his future. However, the chief executive, Ron Gourlay, was waiting for him at the foot of the stairs outside the media suite and duly informed him that he was to be relieved of his duties with immediate effect.

Despite last year's success the club pointed to performances this season having "fallen short of expectations" in reaching their decision, with this technically the least successful campaign – in terms of progress in Europe and trophies gleaned – of the Roman Abramovich era to date. The Russian oligarch was not present at Everton but will now be looking for his seventh manager in eight years at Stamford Bridge.

• Richard Williams: Abramovich was right to sack Ancelotti
• Match report: Everton 1-0 Chelsea
• The Rumour Mill: Who next for the Chelsea job?

His first choice is understood still to be Guus Hiddink, though it remains to be seen whether the Dutchman – who filled in at the club in a caretaker basis in 2009 – can be prised from his contract with the Turkish Football Federation. There is also strong interest in the Porto coach, André Villas-Boas, a former scout under José Mourinho in south-west London; the highly rated 33-year-old is understood to have a release clause in his contract set at around £13m. Marco van Basten and Didier Deschamps are others who may be considered.

Ancelotti privately expected to be sacked from the moment his team lost at Old Trafford on 8 May, a defeat that effectively cost them their Premier League title. "I have spent two fantastic years at Chelsea," he said last night. "I accept the decision and respect it. I am proud of the job I did but now I must think about my future. In my mind I would like to stay in the Premier League – that is my first choice."

The abruptness of the announcement was brutal, inviting comparison with West Ham United's decision to sack Avram Grant in the tunnel at Wigan Athletic the previous weekend. He had hinted that he feared the worst. "I'm officially on holiday from today," he had said. "I'm just not sure how long my holiday will be." Gourlay apparently wished to inform the Italian of his dismissal before the players departed on their summer holidays, with Ancelotti and his assistant Bruno Demichelis, who has also left together with the scouts Luigi La Sala and Giorgio Ciaschini, effectively saying their farewells on the flight back to London on Sunday night after the axe had fallen. He is expected to collect compensation to cover the remaining 12 months of his three-year contract, worth around £6m. However, it is understood that Chelsea may attempt to work a clause into Ancelotti's compensation package that prohibits him from managing another Premier League club.

"The owner and board would like to thank Carlo for his contribution and achievements since taking over as manager in July 2009, which included winning the Double for the first time in the club's history," said a Chelsea statement. "However, this season's performances have fallen short of expectations and the club feels the time is right to make this change ahead of next season's preparations.

"Carlo will always be welcome at Stamford Bridge, where he will be given the reception and respect his position in our history deserves. Chelsea's long-term football objectives and ambitions remain unchanged and we will now be concentrating all our efforts on identifying a new manager."{jcomments on}