Chelsea have warned Atletico Madrid they are ready to cancel Alvaro Morata’s loan and call him back if the Spaniards do not make the move permanent this summer.

Morata joined Atletico on an 18-month loan in January, but Chelsea have the option to recall the striker early in this transfer window if Atletico do not buy him.

And, unable to sign new players because of their two-window transfer ban, Chelsea are prepared to exercise that right unless Atletico pay £50 million to keep Morata.

That leaves Atletico needing to raise cash if, as expected, they complete the signing of Portuguese teenager Joao Felix for a reported fee of £112.9 million.

The news will be a huge concern to Morata, who has made it clear that he wants to stay at Atletico, where he scored six goals during the second half of the season.

One of the biggest problems facing incoming head coach Frank Lampard will be how to replace the goals scored by Eden Hazard, who joined Real Madrid.

Morata joined the Spanish club in January on loan from Chelsea credit: AP

Hazard netted 21 goals last season, with Olivier Giroud second best on 13 alongside Pedro. Ruben Loftus-Cheek hit 10 goals, but he could miss the majority of next term through injury, while Morata was one further back on nine, despite leaving on loan.

With Gonzalo Higuain returning to Juventus, Chelsea have a strike force of Giroud, Michy Batshuayi, who scored nine goals across two loans at Valencia and Crystal Palace, and Tammy Abraham, who netted 26 times in the Championship for Aston Villa.

Morata fell out with former Chelsea head coach Maurizio Sarri, but a return under Lampard would still be difficult after the 26-year-old hit out at his Chelsea team-mates and the Stamford Bridge fans.

The Spanish international arrived at Chelsea for a then club record £57 million in July 2017 and he still has three years remaining on a five-year contract.