Negotiations over an extension to the manager's deal have been ongoing but, with the chairman Stephen Thompson keen to slash staff costs and Houston one of the better-paid managers in Scotland, it is thought that the two men have been unable to reach a compromise on an extension to a deal that expires in the summer.
Discussions this week between Houston, his representative John Colquhoun and the club's directors have been said to be "amicable" but the news arrives just days after United gave their manager permission to speak to npower Championship side Blackpool.
That move came as Houston's position at United became a source of intrigue. One sore point between manager and chairman has been his acceptance of the job as assistant to Craig Levein at the national team, while a poor start to last season was another cause of friction, and there have been rumblings among the club's fans this season – the side is in the midst of a five-match winless run and occupies eighth place.
Neither manager nor chairman was available for comment last night but Houston spoke in hopeful terms about the contract negotiations on Tuesday, expressing surprise about being allowed to speak to Blackpool. "It's unexpected – I haven't applied for any jobs," Houston said. "We were still in negotiations about a new deal for me and my staff. What he has stated is he has to make cutbacks in staff costs."