Italian Capello has been trusted to make the judgement on whether Terry should retain the armband for the World Cup this summer, and it is understood he will make a swift decision.

Terry's position has been the subject of speculation since the 29-year-old failed with a High Court injunction to stop newspapers reporting claims about an alleged affair with lingerie model Vanessa Perroncel, a former girlfriend of Wayne Bridge.

Sports Minister Gerry Sutcliffe has already stated that, should the allegations be proven, Terry's role as skipper would be called into question.

Until this evening, the FA had remained silent on the subject, but it came as no surprise to learn the decision would be left with Capello, who appointed Terry as his captain in August 2008.

"The FA confirm that England manager Fabio Capello alone will make the decision about John Terry's position," said a statement from the national association.

An FA spokesman said: "Fabio is fully up to speed with developments regarding John Terry. He spoke with our chairman Lord Triesman and chief executive Ian Watmore today, who both backed him to make the best decision for England on footballing grounds.

"Fabio is dealing with the matter in his own way using his extensive experience as a football manager."

England's next fixture is against African Nations Cup winners Egypt on March 3 at Wembley, and Capello wants the captaincy issue resolved long before then.

The controversy took on another dimension yesterday when three Manchester City players wore 'Team Bridge' T-shirts in support of their team-mate, who is currently sidelined with a knee injury. None of the three were England players however.

Capello, 63, now faces what appears the most important decision of his England career. Should he decide to strip Terry of the captaincy, he would not have long to identify and appoint a replacement.

Terry has led England with distinction and Capello would need to be certain that another man could follow his example, with the World Cup barely four months away.

Chelsea boss Carlo Ancelotti has already declared his intention to stick with Terry both as the cornerstone of his defence and the club's skipper.

Many believe the England captaincy involves wider responsibilities that cannot be so easily dismissed in this instance.

Having now spoken to Triesman and Watmore, Capello will no doubt feel on more certain ground when he returns to official duties later this week in time for Sunday's Euro 2012 qualifying draw in Warsaw.

Capello has not spoken in public about Terry since the allegations emerged, however he can expect fervent interest in his stance at the weekend, whether or not a decision has been reached by then.

Shortly before the FA broke their silence on the matter, it was revealed that Perroncel has been offered £250,000 to tell her side of the story.

Publicist Max Clifford, who is representing Perroncel, said she is at the heart of a media bidding war.

Clifford said he was in discussions with at least six media outlets all bidding for her take on the events.

A final decision on whether she will sell her story is yet to be made, but Clifford said the bidding offers could rise beyond the £250,000 mark.

He said: "The £250,000 offer is just the latest bid. I am in negotiations on her behalf."

Perroncel - Bridge's former girlfriend - was at Clifford's home today, where she was being updated on the latest media offers.

The publicist told Sky News: "It's a story that everyone's talking about and it's a story that obviously all the papers and the television networks are very, very keen to get to the bottom of and find out what the truth is."

Clifford refused to be drawn on the veracity of the allegations but insisted some press claims were incorrect.

He said Perroncel had first to consider the welfare of her four-year-old son before she made a decision.

Asked whether there was any truth behind the alleged affair, he replied: "All I'm prepared to say is that she's known John a long time and obviously I think during that time they've become very close friends but anything more than that, I wouldn't want to say at this particular stage.

"It's really for her to decide what she wants to do."

Bridge, 29, who has separated from Perroncel and now plays for Manchester City, has said he does not intend to comment on the reports for the sake of the couple's son.

The allegations came to light after a gagging order was lifted by Mr Justice Tugendhat at the High Court in London on Friday.

Terry has two children with his wife, who has reportedly flown to Dubai with the youngsters.