The Israeli coach's position had been subject to speculation all season even though he guided the Blues to second place in the Premier League, but Wednesday's defeat on penalty kicks to United in Moscow seems to have settled his fate.

Although Chelsea played arguably its most entertaining soccer of the season at Luzhniki Stadium, Chelsea terminated Grant's contract following two days of discussions and said it would now try to find a successor.

"Everybody at Chelsea FC would like to thank Avram for his contribution since taking over as manager last September," the club said in a statement. "We will now be concentrating all our efforts on identifying a new manager for Chelsea and there will be no further comment until that appointment is made."

Speculation surrounded Grant's position ever since he succeeded the popular and charismatic Jose Mourinho in September. Always seen as a temporary replacement due to his lack of topflight experience, the rumors continued even after he guided the club to within two points of United in the Premier League.

Frank Rijkaard, Sven-Goran Eriksson and, most recently, Brian Laudrup and Roberto Mancini have all been linked with the club as owner Roman Abramovich reportedly seeks a coach to bring the club titles and a more exciting style of play.

Despite losing just one more Premier League match after a defeat to United in his first game, Grant attracted criticism from fans and commentators, who argued that Grant should have been able to encourage more entertaining soccer from his squad of star players.

He was also criticized for losing February's League Cup final to Tottenham despite having a far more experienced, talented and highly paid team than his rival.

Even so, at a club not run by a demanding Russian billionaire, Grant would likely have done more than enough to earn at least one more year in charge.

But he was always at a disadvantage as he struggled to win over fans shocked at the sudden departure of Mourinho, who had led the club to its first league title in 50 years and then retained it.

Grant was switched to coach from his position as director of football, despite having no Champions League or Premier League experience, prompting incredulity among supporters and the assumption that his was a stopgap appointment.

But he survived to the end of the season and even took Chelsea to its first ever Champions League final.

Chelsea rallied to draw 1-1 through extra time and came within a kick of winning the shootout, but captain John Terry missed the crucial penalty and Edwin van der Sar saved from Nicolas Anelka to earn United a 6-5 win.

Despite Chelsea going so close, British papers were unanimous in assuming that the disappointment of defeat in his home country would lead Abramovich to fire Grant - despite the pair's friendship.