• Failure to capture Martin Jol forced the club to look elsewhere • New manager expected to be backed in the transfer market

Mark Hughes has accepted an offer from Fulham to become the club's new manager. The Welshman will succeed Roy Hodgson, who left in the summer to join Liverpool, and his appointment has disappointed Sven-Goran Eriksson, who had been under consideration.

Mohamed Al Fayed, the Fulham chairman, had turned to Hughes after the failure to prise Martin Jol from his contract at Ajax last week. But Hughes's capture represents a coup for the west London club, who have made startling progress in the past two seasons.

Hughes came to the fore after the impasse with Jol and it quickly became apparent that Fayed could satisfy his financial wishes, on both his contract and the budget for signings. Fayed is determined to make an impact on the summer transfer market and he also has a history of backing his managers with funds.

Hughes faced a dilemma over whether to uproot from north-west England, where his family are settled, but his fierce ambition, which he believes can be sated at Craven Cottage, held sway. He is expected to bring with him his long-time assistant coaches Mark Bowen and Eddie Niedzwiecki, and the goalkeeping coach Kevin Hitchcock.

By recruiting Hughes, Fulham put an end to the sense of uncertainty around the club, which Fayed was conscious might have become damaging had it endured until the eve of the season, and they can begin pressing ahead with their transfer plans. They have an agreement in place with Aston Villa over the purchase of the midfielder Steve Sidwell, to which Hughes must give his consent, while they also have an interest in the England goalkeeper David James, who has left Portsmouth.

If, as expected, Arsenal make an improved offer for Fulham's No1 Mark Schwarzer – Arsène Wenger has had a £2m bid rejected – and Fayed's club sanction the sale, they would then move for James, with Hughes's blessing, believing that Craven Cottage has been James's preferred destination all along.

Hughes's appointment will come as a relief to the Fulham squad, some of whom had started to assess their options following Hodgson's departure. They have just returned from a short tour of Sweden, under the caretaker charge of Ray Lewington, and the situation was becoming unsettling. There is a little over two weeks before they begin their Premier League season, away to Bolton Wanderers.

Hughes's managerial career began with a five-year stint in charge of Wales, whom he almost took to the Euro 2004 finals; only a play-off defeat by Russia, by a single goal over the two legs, denied him. He then spent four impressive seasons at Blackburn Rovers, leading them to three domestic cup semi-finals and establishing them in the top half of the Premier League. His best finish was sixth in 2005‑06, a result that enabled Rovers to qualify for the Uefa Cup.

He left Ewood Park for Manchester City in the summer of 2008 and weeks into his reign the club were taken over by the Abu Dhabi United Group and catapulted into a different financial league, which brought its own pressures. Hughes's side finished 10th that season and also made the Uefa Cup quarter-finals, but he was sacked in December of last year. Many believe he was harshly treated.

Hughes succeeded Eriksson at City and the Swede has again been usurped by him. The Swede's candidacy had been pushed by the club's chief executive, Alistair Mackintosh, with whom he had worked well at City, but Fayed makes the final decisions for Fulham. Mackintosh had a more difficult relationship with Hughes at Eastlands.

Eriksson has the offer of another contract with Ivory Coast on the table while Fulham also had the Switzerland manager, Ottmar Hitzfeld, on their shortlist.