It is understood that the former Portsmouth boss, currently on holiday with his family, has agreed a deal in principle to become the successor to sacked Gianfranco Zola.

Grant resigned as manager of relegated Barclays Premier League side Portsmouth yesterday and subject to a final interview, he is likely to be offered a two-year contract.

Reacting to speculation that Grant's move to the Hammers was all-but signed and sealed, a club spokesman said: "West Ham United can confirm the club is making good progress in the search for a new manager and the appointment will be made by early June.

"The club is in the middle of a thorough selection process which could continue over the next 12 days before being finalised.

"The new manager will then have a month to prepare for the start of pre-season, with all at the club determined to improve on the previous campaign."

Grant's stock in managerial terms has risen substantially after guiding Portsmouth to the FA Cup final in a season when they narrowly escaped being wound-up and went into administration.

It is thought that Pompey received an approach for Grant yesterday but the administrator Andrew Andronikou would not reveal their identity.

"I will honour the confidentiality," Andronikou said.

"We are talking about another manager's job," he told ESPN.

Grant replaced Paul Hart at Fratton Park last November as the club lurched from one financial disaster to another.

Many of the players were forced to wait for their wages to be paid and the club were docked nine points for going into administration.

But Grant rallied his team and led them to the final of the FA Cup where they lost 1-0 to Chelsea.

After resigning his post at Fratton Park, Grant issued a statement saying it "was one of the most difficult decisions" of his football career.

The Israeli added: "After a lot of soul searching and under the circumstances I'm taking a different direction.

"It's been both a difficult and complex year for us at the club, but at the same time, it's been a wonderful and uplifting professional and personal experience.

"I have been inundated with letters and emails from fans. Many have brought tears to my eyes and take it from me; it takes a lot to do that. I will never forget you, the loyal fans of Pompey who, without a doubt, helped me protect the team under such complex circumstances.

"There are very few teams in the world that have fans as passionate and devoted as you are. Seeing you all so proud with your heads held up high is the best reward I can receive.

"It has been a great experience to be part of one of the most wonderful occurrences that has happened in the history of British football and also shows that even in the most desperate times, loyalty, devotion, professionalism and passion can be demonstrated. I wish you all the possible success which you genuinely deserve."

West Ham's new co-owners David Gold and David Sullivan are understood to have made Grant their number one target on a short list rumoured to include Blackburn's Sam Allardyce, Blackpool's Ian Holloway, and Cardiff's Dave Jones.