Villa have been in talks with the Scot after he quit as boss of arch-rivals Birmingham on Sunday.

The Barclays Premier League club have not been deterred from pursuing the 52-year-old by a war of words with City or fearsome opposition from their own fans.

An announcement is now expected to be made in the morning.

Birmingham accused Villa of tapping up McLeish once it became apparent the former Rangers and Scotland boss was a strong contender to succeed Gerard Houllier at Villa Park.

Blues demanded £5.4million in compensation to cover the remaining two years of McLeish's contract.

There have been reports tonight that a figure of £2million has been agreed but this has not been confirmed by either club.

But with all details of a contract thought to have been agreed with McLeish, it is understood legal issues concerning Birmingham are the only hindrance.

Birmingham reacted with anger when Villa confirmed their interest in McLeish soon after he tendered his resignation at St Andrew's.

The club felt betrayed after previously saying they were standing by their Carling Cup-winning manager despite relegation from the Barclays Premier League last month.

Villa turned their attention to McLeish after Roberto Martinez opted not to leave Wigan last Friday.

Birmingham threatened to report Villa to the Premier League and to take out an injunction to prevent his appointment by their neighbours but neither were carried out.

As the row between the clubs simmered, Villa supporters meanwhile launched their own campaign to prevent the appointment, culminating in a protest at the stadium last night.

Yet that depth of ill feeling did not sway Villa owner Randy Lerner or his board, despite suggestions they ended their interest in another candidate, Steve McClaren, after supporter disquiet last week.

The whole process of appointing Villa's third manager in nine months has continually wrong-footed bookmakers.

Other initially well-backed candidates such as Mark Hughes and David Moyes proved way off the mark while Rafael Benitez apparently fell out of contention after asking for certain transfer guarantees.

Villa want McLeish to restore stability after a difficult year which began with the sudden resignation of Martin O'Neill five days before the start of last season.

His successor Houllier made a number of PR gaffes and was involved in a relegation battle before leaving the club after a health scare.

McLeish had been in charge of Birmingham since 2007 following previous spells with Motherwell, Hibernian, Rangers and Scotland.