Crystal Palace’s preparations for the new season were thrown into chaos on Thursday night after Tony Pulis’s deteriorating relationship with the co-chairman, Steve Parish, left the club without a manager going into their opening match at Arsenal on Saturday.

Pulis’s departure after only ten months with the London club was described as “mutual consent” but well-placed sources have confirmed that mutual contempt would be a more fitting term because of the friction between the two men, stretching back to the turn of the year.

Pulis was contemplating whether he wanted to work for Parish as long ago as January, only two months after taking over from Ian Holloway on the run that saw Palace recover from a dire start to end the season in 11th position, recording their highest league finish since 1992.

Malky Mackay has been installed as the favourite to replace Pulis, not least because of his close relationship with Iain Moody, his former colleague at Cardiff City and now the sporting director at Selhurst Park.

Steve Clarke and Neil Lennon also feature prominently on the bookmakers’ list after a day of fast-moving events that has seen Palace’s relegation odds take a significant move in the wrong direction.

The announcement, and particularly its timing, certainly represents a grievous setback for the club bearing in mind their transformation since Pulis took charge when they were bottom of the division.

Pulis finished the season as the Premier League’s manager of the year, but the 56-year-old has become increasingly frustrated with the restrictions Parish has apparently put on him on the transfer market and what the former Stoke City manager considered as the co-chairman blurring the lines between their jobs.

The matter came to a head after it started to emerge that Pulis was considering his position and the two men agreed to a hastily arranged meeting after training on Thursday afternoon. Pulis had wanted more responsibility when it came to signing players and felt that he had been undermined too often.

After seven years at Stoke with a strong working relationship with the chairman, Peter Coates, he did not appreciate having a reduced role at his new club. He was also dissatisfied with Moody’s role and it quickly became apparent during his talks with Parish that the damage was irretrievable.

“Tony is a traditional manager who wants to run things on the football side,” a source told the Guardian. “It’s become an irritant … It’s a festering wound that has been there for a long time. After the season we had, the manager hoped the chairman would have thought: ‘Right I’ve got myself a good manager and now I need to back him’. It’s actually got worse not better. And now it’s been brought to a head.”

The announcement came on the same day that Crystal Palace confirmed the signing of Martin Kelly from Liverpool, their fourth new arrival of the summer after Fraizer Campbell’s £900,000 move from Cardiff City and the free transfers of Brede Hangeland and Chris Kettings, formerly of Fulham and Blackpool respectively.

Palace have been operating with a wage limit of around £40,000 a week and Pulis had been frustrated about missing out on other targets. Steven Caulker went from Cardiff to QPR while Gylfi Sigurdsson returned to Swansea City from Tottenham Hotspur.

On Parish’s part, his thinking is that Palace have to work with a reasonably tight financial budget and that he is entitled to play a hands-on role with the club he is financing. It is also believed he wanted to see more academy players being given a chance, whereas Pulis was looking to bring to more established and experienced players as he tried to maintain his record of having never been relegated.

Keith Millen, the assistant manager, will take charge for the Arsenal game while the other members of Pulis’s coaching staff, including Gerry Francis and long-time assistant Dave Kemp, have been asked to help him out before leaving their roles afterwards.