Steve Bruce has parted company with Newcastle United after the club’s new owners decided a change of manager was imperative.

Bruce had spent just over two years in charge at St James’ Park after succeeding Rafael Benítez in July 2019 and presided over his 1,000th game in club management when Tottenham won 3-2 on Tyneside in front of the live television cameras on Sunday.

Paulo Fonseca, a former Shakhtar Donetsk and Roma coach, is among the contenders to replace Bruce. He is out of work and came close to taking the Tottenham job in June.

The 60-year-old Bruce kept Newcastle in the Premier League for the past two seasons but has proved a deeply unpopular successor to Benítez, with the hostility deepening in recent weeks. With the team second bottom of the Premier League and still to win a game, Bruce’s exit – along with a pay-off understood to be in the region of £7m – was far from unexpected.

 “Newcastle United can confirm that Steve Bruce has left his position as head coach by mutual consent,” the club said in a statement which thanked Bruce “for his contribution” and wished him well.

The club said Bruce’s assistant, Graeme Jones, would take caretaker charge for Saturday’s game at Crystal Palace; Jones may remain on the coaching staff long term. He will be supported this week by the coaches Steve Agnew, Stephen Clemence, Ben Dawson and Simon Smith.

Bruce said: “I am grateful to everyone connected with Newcastle United for the opportunity to manage this unique football club.

“I would like to thank my coaching team, the players and the support staff in particular for all their hard work. There have been highs and lows, but they have given everything even in difficult moments and should be proud of their efforts.

“This is a club with incredible support, and I hope the new owners can take it forward to where we all want it to be. I wish everyone the very best of luck for the rest of this season and beyond.”

The generosity of Bruce’s pay-off may raise eyebrows but, when he took the Newcastle job two years ago, Mike Ashley was actively trying to sell the club. The likelihood new owners would want their own manager meant Benítez’s successor was able to negotiate a significant compensation clause in his contract.

It remains to be seen if Bruce – previously in charge of Sheffield United, Huddersfield, Birmingham, Crystal Palace, Wigan, Sunderland, Hull and Sheffield Wednesday – will seek another managerial position or whether he decides this is the right moment to retire.

The former Manchester United captain acknowledged he expected to be sacked as soon as the new owners moved into St James’ Park. Although he spoke to Amanda Staveley, the Newcastle director with responsibility for day-to-day running of the club on behalf of its Saudi Arabian power brokers and majority stakeholders, on the day the takeover was confirmed, he did not meet Staveley in person until four days later, when she visited the training ground.