The former Fulham, Manchester United, Tottenham and Everton striker signed for the Black Cats on a one-year deal last summer but has not started a Premier League match since.

He is now free to depart, although the Northern Irishman noted that the forward may remain with the squad as cover until the end of January.

"As of today, we have told Louis he is free to speak to other clubs and to leave if he can fix himself up somewhere," O'Neill told the Shields Gazette on Wednesday.

"We have come to an agreement whereby we will cancel the remainder of his contract, shake hands and go our separate ways.

"That said, we are still a bit short in terms of numbers and Louis may stay with us until the end of the month until such time as hopefully we have strengthened the squad a little more. But we agreed that he could go as early as today, if he wishes to."

O'Neill also declared that Saha is the subject of interest from an unnamed South African club, while he went on to speak of the Frenchman's disappointment at his failure to make an impact at the Stadium of Light.

"I have heard that there is some interest in South Africa for Louis and it might be of some interest to him," he said.

"I wasn't expecting him to be starting 20 Premier League games on the trot or anything like that but I think he's been disappointed.

"In fairness, I think he's been disappointed when he's come on to the field. I think he feels he might have been making a bigger impact. He's had a chat to me and I understand that.

"This man has had a really good career and he didn't want to be a bit-part in things."

Meanwhile, O'Neill has recalled winger Ahmed Elmohamady from his loan spell at Championship club Hull City.

The Egyptian, who joined the Tigers temporarily at the end of August, had impressed during his time on loan at the KC stadium, but returns to the Black Cats, who were only able to name six substitutes against Bolton in the FA Cup on Tuesday evening.

A statement from Hull read: "We would like to thank Elmo for his efforts and wish him all the best for the future."

Elmohamady, appeared for the Black Cats as a substitute in the 0-0 draw with Arsenal at the start of the season, but was allowed to move to Humberside soon after.

He featured 23 times for Hull as Steve Bruce’s team battle for automatic promotion back to the Premier League, with his only goal for the club coming in a 3-2 win over Leeds United in September.