Rafael Benitez's future in doubt at Liverpool after bookmakers suspend betting

Rafael Benitez's future as manager of Liverpool looks more uncertain than ever after leading bookmakers suspended all bets on him leaving the club.

The news comes hours before his team take on Real Madrid in the last-16 of the Champions League in the Bernabeu with rumours in the Spanish capital suggesting the Liverpool manager will leave Anfield.

The Spaniard has been locked in talks over a new contract in recent months and surprised the club’s hierarchy by rejecting a fifth draft of the deal over the weekend. Benitez has less than 18 months left on his contract at Anfield and believes that if he reaches the end of the season without a commitment from Tom Hicks and George Gillett, the Liverpool owners, he would be forced to look for a new job.

The Americans agreed to offer Benitez a new contract before Christmas but the document remains unsigned. Sources close to Benitez have suggested that the Spaniard has reached agreement with the club on a number of occasions, only to find that, when the written contract arrived, it contained different terms than had been agreed verbally.

The owners have bowed to his requests for more control over transfer policy and the youth academy, however, sticking points remain about the job security of his backroom staff and his concern at the delays in the decision-making process, given the dysfunctional relationship between the owners.

Benitez began his career in coaching at the Bernabeu in 1986 and the Liverpool manager has been linked with a return to Madrid, where Juande Ramos is the incumbent. However, Ramos is a short-term appointment and is likely to be replaced in the summer.

Speculation has suggested that Kenny Dalglish, the former manager, has been approached to act in a caretaker capacity in the event of Benitez leaving, but the Scot remains a strong supporter of the Spaniard and would be unlikely to countenance the dismissal of a man who has brought the European Cup to Anfield.

The internal politics of Liverpool have been tortuous since the American owners took over and Benitez has endured a difficult relationship with Rick Parry, the chief executive. The pair have been enbroiled in a power struggle which has worn down the manager. However, Benitez believes he is right and will not depart without a fight.

Rupert Adams, a spokesman for William Hill, said: "We are slightly jumpy after being turned over by the recent Weymouth coup but the level of interest on Rafa getting the sack is unprecedented with over 300 calls logged today alone.

"We would be very surprised if he is still the Liverpool boss by midnight on Sunday."