Arnold had been linked to the job since previous sky blues boss Vitezslav Lavicka was released by Sydney late last season.

With Central Coast mired in cash flow problems and new Russian investors increasingly hesitant to sign on at the club, Arnold looked ever more likely to make the move south from Gosford to Sydney.

At one point just a few weeks ago, it appeared only personal terms needed to be agreed for the move to happen.

But the Mariners 5-1 thumping of Tianjin Teda at Bluetongue Stadium last week made Arnold put negotiations on hold while he guided the Mariners through their final group stage game that could see them reach the knockout phase of the Asian Champions League.

Sydney gave Arnold a deadline of 5pm today to make his mind up - and today the Mariners confirmed Arnold had chosen to stick with Central Coast next season.

However this afternoon Sydney claimed they had broken off talks with Arnold after he made some last minute demands they were not prepared to meet.

A statement from the club today said: "Sydney FC has discontinued discussions with Graham Arnold after the club was not prepared to meet some last minute requests put forward today."

Negotiations between Arnold and SFC stalled weeks ago when Arnold tried to bring his Mariners sidekick Phil Moss and fitness guru Andrew Clark with him.

However Sydney insisted they already had a support team in place with Steve Corica and Dr Craig Duncan.

Details of the latest final requests are not yet known but Arnold may have simply been looking for an extension to negotiations to allow him to complete the Mariners' ACL group stage campaign before making his decision.

Sydney FC's Football Director Gary Cole added: “Sydney FC presented a very attractive offer to Graham based on the understanding that he was free to join the club.

“We thought our offer gave everyone the best opportunity to come to terms.

“We had asked Graham for a final answer by today but we were presented with some last minute requests, which we were not prepared to meet.

“We have been working on a small number of alternative options for the head coach role and those discussions will continue.”

Arnold is believed to have negotiated a substantial payrise from the Gosford club to stay, although not as much as Sydney were offering - and a better budget to bring new players to Bluetongue.

It's believe the club has found new cash backing to allow them to hold on to Arnold and put their recent cash worries behind them.

The move puts Sydney back in the market for a new coach, although Arnie's snub will be mainly  welcomed by SFC fans who had been largely unenthusiastic about the former Socceroos coach.

However Mariners fans will be delighted to hang onto Arnie and build on the club's current success in the future.

Central Coast Mariners Chairman Peter Turnbull welcomed the decision and added: “The board, staff and players are all delighted Graham has decided to continue his outstanding work at the club.”