The move comes as Bolton are all set to welcome the 43-year-old Scot by settling Burnley's demand for compensation - believed to be £3m.
Coyle removed the last major obstacle to succeeding Gary Megson at the Reebok by telling the stunned Clarets he wanted to return to his former club.
And Trotters' chairman Phil Gartside won't jeopardise the deal by quibbling over Burnley's cash demands.
Bolton, bizarrely, continue to remain silent over Coyle's imminent arrival but could break their silence before tonight's Premier League game at Arsenal.
It makes Old Trafford assistant Phelan odds-on favourite to replace the former Republic of Ireland striker at the ambitious Lancashire club.
The 47 year-old Lancastrian began his playing career at Turf Moor before moving to Norwich and then Old Trafford.
Burnley fans reacted with predictable anger on hearing the news of Coyle's imminent departure.
One supporter suggested the compensation package was "30 pieces of silver."
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Showing comments 1 to 25 and replies | View All
Horace Hughes, Salford (06/01/2010 at 12:09)
neal 07, south stand lower (06/01/2010 at 12:22)
Red Pie, Wigan (06/01/2010 at 12:23)
Lee , Heywood, Heywood (06/01/2010 at 12:39)
2OLEGEND, Lancaster (06/01/2010 at 12:42)
Alias Smith, over the moon (06/01/2010 at 12:43)
Red Afro, Derby (06/01/2010 at 13:16)
better off red (06/01/2010 at 13:21)
venkman, manchester (06/01/2010 at 13:33)
Lauret Blanc would be an ideal choice, with a view to then maybe taking over. But i'm not arrogant enough to suggest that being assistant manager at United is a bigger job than managing the French League Champions.
All hyperthetical at the moment but if Phelan does go I hope the new man brings a few new players with him.
Scholsey passed me the ball... (06/01/2010 at 13:48)
Barry Lee, USA (06/01/2010 at 14:04)
Drago 34 (06/01/2010 at 14:38)
Scottie Man, The Beautiful North (06/01/2010 at 15:01)
Can I just mention, those of you calling for SAF tenure to be ended, hang your head in shame...Last year Mourhino was mentioned, you jump on the bandwagon...now Blanc......next week Klinnsman...or whoever...get real and get behind the team. New blood is needed but, not at the helm!
Red Afro, Derby (06/01/2010 at 15:45)
If Phelan were to be offered the Burnley job there'd be an uprising at Turf More. At OT they'd be a celebration reminiscent of winning the CL trophy. Burnley don't even mention Phelan as potential successor to Coyle.
tooth&claw, manchester (06/01/2010 at 16:00)
Red Culture (06/01/2010 at 16:01)
Knowall, stretford end (06/01/2010 at 16:50)
There's Only One Keano, Baltimore, USA (06/01/2010 at 17:20)
Bill Wirral (06/01/2010 at 17:54)
Sparky, Salford (06/01/2010 at 18:01)
Ben Taylor (06/01/2010 at 18:08)
Horace Hughes, Salford (06/01/2010 at 19:15)
Serge, Europe (06/01/2010 at 20:10)
venkman, manchester (06/01/2010 at 20:12)
Yeah fair enough I'll have that. I saw an article on Sunday from the Timesonline about Fergie changing the team. Sunday was the 99th game in a row where he changed the starting line up from the last game. It's no wonder our midfield has looked like a bunch of strangers playing together for the first time in most games this season. I must point out that I don't want Fergie out but when he says he has £80 million to spend but doesn't need too he is either lying or he's deluded. I almost hope it's the former. It's a tribute to Fergie and his ability to get the best out of the players that we're still 2nd and could win our 4th title in a row. But the number of average players is gradually taking over from the class players.
blacksocks, stretfordend (06/01/2010 at 20:17)