Alex McLeish has resigned as Scotland manager after Scottish Football Association (SFA) chief executive Gordon Smith confirmed the former Rangers boss submitted a written resignation today. The 48-year-old is now expected to be unveiled as the new Birmingham manager tomorrow.

Birmingham appear to have won the battle to sign the Scot for the Blues have called a press conference at St Andrews for tomorrow morning when McLeish is set to be named as Steve Bruce's successor.

McLeish arrived back in England this morning after overseeing the 2010 World Cup draw in Durban and is understood to have held talks with City co-owner David Sullivan.

It is believed a deal has been struck to bring the former Rangers manager to the Premier League club with McLeish more than doubling his current salary of around £350,000 (€490,000).

The compensation agreement with the SFA is understood not to be a stumbling block and will cost Birmingham around £1million (€1.4m) for McLeish's services.

"We are very disappointed to lose Alex as our manager," said Smith this afternoon.

SFA president George Peat said in a statement: "It is with regret that I can confirm that Alex McLeish has notified the Scottish FA that he has resigned from his position as national team coach with immediate effect.

"I am disappointed that Alex has chosen this course of action. He is an outstanding manager who has done a fantastic job with the national team."

Chief executive Smith and president Peat had been involved in talks with McLeish during their trip to Durban for last Sunday's 2010 World Cup qualifying draw and hoped he would agree an improved new contract.

His deal was due to expire after the 2010 World Cup.

McLeish steered Scotland close to qualification for the Euro 2008 finals, with their hopes finally shattered by Italy's 2-1 win at Hampden 10 days ago.

However McLeish, on his arrival back in Britain, decided his future was not with the Scotland team.

The World Cup qualifiers begin next season and the lack of competitive games in the coming months may have been a factor in McLeish's decision to quit.

Peat said: "Everyone at the SFA and indeed Scotland fans around the world were looking forward to Alex leading us into the World Cup qualification campaign.

"This is why we chose to offer Alex an extended contract while we were in South Africa. Sadly, he has chosen not to take up this offer.

"A special meeting of the SFA board will take place tomorrow (Wednesday) morning at 11am to discuss the current situation."