Claudio Ranieri has ended an 11-year absence from the Premier League after Leicester City took the surprise decision to appoint the former Chelsea manager on a three-year contract.

The Italian, who has been out of the game since being dismissed by Greece last November, replaces Nigel Pearson whose hugely successful if tumultuous second spell at the club ended in the sack last month with the board citing “fundamental differences in perspective”. Ranieri was introduced to the Leicester squad by the vice-chairman, Aiyawatt Srivaddhanaprabha, and the director of football, Jon Rudkin, on Monday at their pre-season training camp in Austria and will oversee his first session on Tuesday.

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City had considered reappointing Martin O’Neill to the role in which he had excelled between 1995 and 2000, the most successful period in the club’s modern history, only for complications to emerge in extricating him from his position with the Republic of Ireland. The merits of Bolton Wanderers’ Neil Lennon, Peter Schmeichel and Guus Hiddink, who left his job with Holland last month, were also discussed before the club’s Thai owners turned their attentions to the Italian.

“It is my great pleasure to welcome Claudio Ranieri, a man of remarkable experience and knowledge that will lead us into the next phase of our long-term plan for Leicester City,” said Srivaddhanaprabha. “His achievements in the game, his knowledge of English football and his record of successfully coaching some of the world’s finest players made him the outstanding candidate for the job and his ambitions for the future reflect our own.

“To have attracted one of the world’s elite managers speaks volumes both for the progress Leicester City has made in recent years and for the potential that remains for the club’s long-term development.”

The 63-year-old Ranieri will be taking on his 16th position, with spells at Fiorentina, Valencia, Atlético Madrid, Juventus, Roma and Internazionale on his curriculum vitae. His four years at Chelsea coincided with the sale of the club to Roman Abramovich in 2003 and, although he led the team to the Champions League semi-finals, he spent the last few months in the role effectively as a dead man walking with José Mourinho having been earmarked for the position.

His nomadic coaching career took him to Monaco, whom he led to promotion from Ligue 2 and to second place in the top flight the following season, after his spell at San Siro, though his most recent employment, with Greece, ended in humiliation. His two-year contract was cancelled after only four games, the third of which was a home defeat by the Faroe Islands.

“I’m so glad to be here in a club with such a great tradition as Leicester City,” said Ranieri. “I have worked at many great clubs, in many top leagues, but since I left Chelsea I have dreamt of another chance to work in the best league in the world again. I wish to thank the owner, his son and all the executives of the club for the opportunity they are giving me. Now I’ve only one way for returning their trust: squeeze all my energies to getting the best results for the team.”

The Italian will be initially assisted at the team’s base in Bad Radkersburg by Craig Shakespeare and Steve Walsh, who both remained at the club after Pearson’s dismissal, before the first pre-season friendly at Lincoln City next Tuesday. The manager will be backed further in the transfer market, with players such as Robert Huth, Shinji Okazaki and Christian Fuchs having been recruited.

Leicester, who spent 140 days at the foot of the Premier League last term, revived to win seven of their last nine games under Pearson to finish an impressive 14th despite the manager appearing to have a magnetic attraction to controversy at times. He had clashed with a City supporter – earning a £10,000 fine from the Football Association – journalists and had grappled with Crystal Palace’s James McArthur on the touchline in February.

Pearson had been informed after that bizarre incident that he was out of a job only to be told that he was back in work a few hours later. Yet an ill-fated end-of-season “goodwill” tour of Thailand ended with three Leicester players, including the manager’s son James, accused of taking part in a racist sex tape, with the trio subsequently having their contracts terminated following a club investigation. Pearson was fired shortly afterwards.