• Bookmaker suspends betting on O’Neill taking vacant Leicester job • Roy Keane likely to take over for Euro 2016 qualifiers if O’Neill goes

The Football Association of Ireland would be happy to let Martin O’Neill depart amid interest from Leicester City. A bookmaker has suspended betting on the 63-year-old replacing Nigel Pearson, who was sacked by the Premier League club last month.

Although the FAI is officially denying that was the case, a source told the Guardian that they would not stand in O’Neill’s way if he wants to vacate his contract early and return to club management.

There has not yet been a formal approach from Leicester but O’Neill is understood to be top of the club’s list of replacements and an offer could be made as soon as the weekend.

O’Neill had been priced at 10-1 to move back to Leicester, where he enjoyed a successful spell between 1995 and 2000, winning two League Cups, but a succession of four-figure bets early on Friday led to his odds being reduced to 1-4 with some bookmakers. William Hill suspended its market.

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If O’Neill were to rejoin Leicester, the most likely outcome from an Ireland point of view would be that his assistant, Roy Keane, takes control for the remaining four Euro 2016 qualifiers. A job share which would allow O’Neill to see out his Ireland contract, which runs to the end of the campaign, appears unlikely after the FAI chief executive, John Delaney, ruled out such a possibility last year.

That was before Keane doubled up as Aston Villa assistant under Paul Lambert, however. The former Ipswich and Sunderland manager lasted only five months at Villa Park, eventually citing a desire to focus on Ireland as the reason for his departure.

Ireland have struggled in qualifying. Last month’s draw at home to Scotland leaves them in fourth position in Group D with games against the leaders, Poland, and the world champions Germany still to come. They did earn a draw away to a below-par Germany but O’Neill’s only two competitive wins have come against Gibraltar and Georgia, where a late Aiden McGeady goal saved their blushes.

O’Neill earns €1.2m a year, partially funded by the businessman Denis O’Brien, and if he were to depart early it could be viewed as a saving for the cash-strapped organisation now hopes of qualifying for next year’s tournament in France have all but evaporated.

The O’Neill-Keane combination was immediately christened the dream team when they took over from Giovanni Trapattoni in 2013 but after showing some promise in early friendlies performances have slumped.

Leicester returned to pre-season last week and will open their league campaign against Sunderland, who sacked O’Neill in 2013. The Northern Irishman has never hidden his desire to take another Premier League job and when asked last season, at a time when Leicester were favourites to be relegated, if he would consider coming back, he said: “Never say never.”