Press Association Sport understands majority shareholder Lord Michael Ashcroft is to pay the £4.88million debt directly to Russo, who yesterday rejected a plea from the Coca-Cola Championship side to defer repayment of his loan.

A Watford source tonight told Press Association Sport: "Lord Ashcroft has written to Jimmy Russo's lawyers to say he will pay him the money, and asking him to stop the administration process.

"Watford are now awaiting a formal response."

The Hornets had look set to be forced into administration after Russo and brother Vince, the club's former vice-chairman, rejected a £7.5million rights-issue rescue package from Lord Ashcroft on Wednesday evening.

Russo, who resigned his position on Tuesday, had demanded his money back by Thursday despite the ramifications for the club, who would be deducted 10 points and plunged towards the Championship relegation zone.

The improved offer from Lord Ashcroft appears set to bring an end to the matter, and when asked whether he would be accepting the deal, Russo told BBC Radio 5 Live: "Definitely, not a problem.

"The sad thing is this could have all be resolved without all the pain that's gone on over the last week or so.

"We've been asking him [Lord Ashcroft] to come to the table virtually every week. But now that he's prepared to pay my debt, that's great.

"It's good for the club. I'm absolutely delighted. But...why leave things to the last second?"

Russo confirmed that his threat to take the club into administration was more than mere posturing, although he would have done so reluctantly.

"When you make an announcement that you are going to put the club into administration, you got to go through with it," he said.

"Was it something I wanted to do? No, never.

"It's something they should have taken into account when they decided my presence was not wanted on the board, despite all the good things that we'd done for the club."

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He added: "I'm relieved that this has been sorted out, and disappointed that it's taken so long."

Russo also mounted a robust defence of his position after interim Watford chairman Graham Taylor branded him a "bad man" earlier today for allowing the club to come to the brink.

"I thought that was a disgraceful comment," Russo revealed. "He should have been more selective with his words.

"How can somebody who has rescued the club four times, have a contribution of £9million in the club, never been paid a penny ... become a bad man?

"I think Graham should apologise for that comment. I think that was totally out of order, and I don't think I deserved that.

"He should really look at that again and pick up the phone - if he's big enough."

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The Hornets tonight also confirmed the £7.5million rights issue is still going ahead, with Lord Ashcroft in effect taking over the debt from Russo.

The rescue package, which will be underwritten by Lord Ashcroft, means the club can be kept running at least until the end of the season.

"The feeling inside the club tonight is one of huge relief," a Watford spokesman told Press Association Sport.

"The right decisions have been made by both parties for the future of the football club."