The press pack pounce on the likely successor to Capello after he is found not guilty [GALLO/GETTY]

Tottenham manager Harry Redknapp was cleared of tax evasion on Wednesday, removing a key barrier to his chances of becoming the next England coach on the day that Fabio Capello resigned from the position.

Redknapp was found not guilty of two counts of concealing $295,000 of transfer bonuses in a Monaco bank account while in charge of Portsmouth.

Former Portsmouth chairman Milan Mandaric was also found not guilty of two counts of cheating the public purse after the two-week trial at Southwark Crown Court.

Mandaric hugged Redknapp as the verdict was announced, and their supporters cheered from the back of the courtroom.

Now cleared of the charges, Redknapp is a favourite to succeed Capello who handed in his resignation to the English FA on Wednesday after publicly disagreeing with their decision to remove John Terry as captain. The FA were prompted into making the decision when Terry’s trial for the racist abuse of Anton Ferdinand was pushed back to after the European Championships

"It really has been a nightmare,'' Redknapp said outside the court.

"There was no case to answer."

The 64-year-old Redknapp managed Portsmouth from 2002 to 2004 and returned in 2005 after a brief spell at Southampton before moving to Tottenham in 2008.

"Everyone at the club is delighted for Harry and his family," Tottenham said in a statement.

"This has been hanging over him for over four years and the last two weeks have been particularly difficult. We are pleased to see this resolved and we all look forward to the rest of the season.''

Redknapp has fought the accusations while enjoying the most successful period of his managerial career at Tottenham.

Britain's tax authority said it had "no regrets" about taking the case to trial.

"It was vitally important that the facts were put before a jury for their consideration,'' said Chris Martin, assistant director of criminal investigations at HM Revenue and Customs.

"We accept the verdict of the jury but I would like to remind those who are evading tax by using offshore tax havens that it always makes sense to come forward and talk to us before we come to talk to you."