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Sven-Goran Eriksson has been told he will be sacked as Manchester City manager at the end of the season, BBC Sport understands.
City owner Thaksin Shinawatra told Eriksson he was "not the right man for the job" at a meeting on Sunday, a source close to the manager said.
Eriksson informed the players at training on Monday that he would be dismissed, provoking an angry response.
The Swede, who has two years left on his contract, says he will not resign.
Shinawatra has been unhappy with City's results since the turn of the year.
The Thai billionaire was at the City of Manchester Stadium on Sunday to watch his team throw away a 2-0 lead to lose 3-2 against Fulham.
Afterwards, he held a meeting with Eriksson and told him he would be dismissed after their final two games of the season.
"Sven reacted calmly, as usual, but he was very surprised and disappointed," the source told BBC Sport.
"He doesn't want to leave the club and will not resign. He loves working with the players and his work at Manchester City has only just begun."
City confirmed that Eriksson would be in charge for the final two games of the season, away at Liverpool and Middlesbrough, but made no comment about what would happen in the summer.
Eriksson's assistant, Tord Grip, told Swedish newspaper Aftonbladet that he expected them to leave City at the end of the season.
"We will be here for the two last matches. They probably think that we haven't done a good enough job", said Grip.
"Sven will receive new offers soon I'm sure."
Eriksson took over as City manager five weeks before the start of the season and the team occupied third spot in the Premiership in November.
However, their form has faltered badly since Christmas and they now lie ninth, having won just four of their last 15 games.
"The team has not been playing as well as it should have or getting the right results since Christmas," said the source.
"But overall it has been a good season. Thaksin agreed a five-year plan with Sven in the summer and the target for the first year was to finish in the top 10."
I think it is crazy that his job is even being talked about as being in danger - he has been good for everyone at City
Last week's Micah Richards column
Shinawatra bankrolled eight summer signings at a cost of more than £46m shortly after buying the club, but BBC Sport understands he has had no direct contact with Eriksson in the second half of the season.
"They met several times personally at the start of the season and then nothing," said the source.
"Sven has had a list of players he wants to sign next summer for several weeks, but he hasn't been able to get the go-ahead to get them.
"He talks to (City chief executive) Alistair Macintosh, but things break down when he then goes to the chairman."
The City players are understood to have reacted with a mixture of shock and anger when Eriksson told them he would be leaving.
Last week, City defender Micah Richards said in his BBC Sport website column that the players were "100% behind" Eriksson.
"I think it is crazy that his job is even being talked about as being in danger - he has been good for everyone at City," said Richards.
Shinawatra will now set about the task of landing a new manager, with Portugal coach Luiz Felipe Scolari already touted as a replacement for Eriksson.
It seems certain that any new manager will have a considerable amount of money to spend in the summer.
Shinawatra has hundreds of millions of pounds worth of assets in Thailand frozen as he awaits trial on corruption charges later this year.
Yet his former lawyer, Noppadom Pattama, who is now Thailand's foreign minister, told BBC Sport that he expected these assets to be "unfrozen in the near future".
