Rangers have confirmed that manager Ally McCoist has resigned and is serving a 12-month notice period.
In a statement to the Stock Exchange on Monday, the Scottish Championship club also said the 52-year-old's salary will revert to £750,000 after he took a 50% wage cut earlier this year.
Directors plan to meet McCoist this week to seek an "amicable solution".
It is understood the Rangers manager is looking for around £400,000 if he is to leave immediately.
McCoist took over in 2011 but has faced pressure from fans and the club to win promotion to the top flight.
Rangers are currently second in the table, nine points adrift of Hearts.
Monday's statement to the Stock Exchange ends days of speculation following reports on Friday that Rangers legend McCoist had resigned.
"The company announces that Alastair McCoist, manager of the first-team squad, has resigned," it read.
"His service contract dated 28 December 2010, which was subsequently amended, has a 12-month notice period.
"The directors will hold discussions with Mr McCoist to seek an amicable solution in the best interests of the company, and expect to be in a position to make a further announcement before the end of the week.
"During the notice period, Mr McCoist's salary will increase significantly to £750,000 per annum."
BBC Scotland's Richard Wilson says there are four options now open to the cash-strapped club:
- Leave McCoist in place to work out his notice;
- Pay McCoist his 12-month salary in full and release him;
- Reach a financial settlement that suits both parties;
- Put McCoist on leave for 12 months and appoint a new manager.
Rangers remain in a fragile financial state.
The club reported £8.3m losses last month and need to raise a similar amount in January to keep the business going for the next 12 months.
McCoist, who won nine Scottish Premier League titles with Rangers as a player, refused to talk about his future on Friday.
"I have absolutely no comment on rumours," he said, following Friday's 2-0 defeat by Queen of the South.
"I will deal with cold, hard facts. I think you know me well enough that I will give you an opinion on that. But I can't comment on speculation."
Newcastle United owner Mike Ashley, who holds a 9% stake in the Ibrox club, could yet have the final say on whether McCoist keeps his job.
Rangers, who were founded in 1872, had never played outside the top division from the formation of the Scottish League in 1890 until they entered the Third Division in 2012.