THE Scottish Football Association will hold formal talks with Michael O'Neill about becoming the new Scotland manager next week after finally agreeing a compensation package with the Irish Football Association.

O'Neill, who led Northern Ireland to the Euro 2016 finals and a Russia 2018 play-off spot, is the SFA's preferred candidate to succeed Gordon Strachan.

They made an official approach for O'Neill to the IFA back in November - but permission to speak to him has only been granted now following weeks of talks over compensation.

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There is no guarantee the 48-year-old, whose current contract runs until the Euro 2020 finals and who has been offered a lucrative four year extension, will accept the chance to take on the Scotland job.

He has also attracted the attention of club sides in England and Stoke City, who sacked Mark Hughes last weekend, are the latest Barclays Premier League club to be linked with him. Both Sunderland and West Brom were granted permission to speak to him by the IFA this year.

But senior SFA officials will try to persuade the Edinburgh-based coach to take over the running of the national team next week and are prepared to offer him a four year contract.

The former Dundee United, Hibs, Aberdeen and St. Johnstone midfielder would become the best-paid manager in Scotland's history if he accepts the challenge.

O'Neill, who previously managed Brechin City and Shamrock Rovers, is believed to want his future sorted out by the end of January.

The draw for the inaugural UEFA Nations League this September takes place in Lausanne on January 24. There are potential friendly dates in both March and June.

Portadown-born O'Neill has been in charge of his country for six years and ended a 30 year wait for them to qualify for a tournament finals when he took them to Euro 2016.