Although Scolari, who won the sport's biggest prize with his native Brazil in 2002, was hotly tipped to succeed Avram Grant at Stamford Bridge it was believed that no formal announcement would be made until after Portugal's Euro 2008 campaign was at an end.

Chelsea said in a statement: "Chelsea Football Club is delighted to confirm that Luiz Felipe Scolari will be the club's new manager from July 1, 2008."

The statement continued: "Felipe has great qualities. He is one of the world's top coaches with a record of success at country and club level, he gets the best out of a talented squad of players and his ambitions and expectations match ours.

"He was the outstanding choice.

"Out of respect for his current role as head coach of the Portuguese national team, and to ensure minimum disruption to this work, there will be no further comment from Chelsea FC nor from Felipe about his new role until his employment with us commences."

Former Chelsea midfielder Ray Wilkins described Scolari as "a manager of top quality".

He told Sky Sports News: "It appears that he's up for a challenge. He's a big guy, he's charismatic. This will be a breath of fresh air."

Stamford Bridge legend Ron Harris also welcomed the appointment.

"I think it's a top-class appointment," he told Sky Sports News. "They have got a top-class manager."