Paul Lambert's magical three-year reign as Norwich City manager is all but over after the Scot offered his resignation and opened talks with Premier League rivals Aston Villa.

The Canaries confirmed yesterday afternoon that the 42-year-old's request had been turned down 'whilst discussions with another club' were taking place. Compensation between the two clubs is yet to be agreed.

However, it now seems certain the man who took City from League One's depths to the top table of English football will take on a new – and sizeable – challenge at Villa; a side that finished nine points and four places below Norwich last season.

Some attention has already turned to who could take over from Lambert in the Carrow Road hot-seat, with the early betting suggesting former Norwich defender and current Cardiff boss Malky Mackay is favourite. Birmingham manager Chris Hughton is not far behind, with Steve Bruce, Lee Clark and Gus Poyet also figuring in the early list.

But many will still be digesting the news of the imminent departure of a man who will go down in history as one of the club's most successful managers.

'We have fought hard to keep Paul at Norwich City and have not accepted his resignation whilst discussions with another club are taking place,' read the Canaries' statement yesterday.

'However, whatever happens, we want to place on record our sincere gratitude for everything Paul has done for the club over the last three fantastic seasons.'

On a dramatic day of speculation, reports surfaced yesterday morning the City boss had tendered his resignation after being denied the chance to talk to Villa about the vacancy left by Alex McLeish, following their 2-0 defeat at Carrow Road on the final day of the season.

It is understood City's refusal to accept Lambert's resignation allows them to negotiate compensation with Villa for their manager's switch.

But there has been no word on the future of Lambert's coaching team that includes assistant Ian Culverhouse and football operations manager Gary Karsa.

The trio, who have worked together since joining forces at Wycombe, arrived as one from Colchester United three years ago, while Lambert has repeatedly stated the importance of his right-hand men during his time at Carrow Road. Lambert's record at Norwich over three seasons has seen the club win two promotions, the League One title and 49pc of its matches in a football success story unrivalled in recent years. His continued success has also meant football's rumour mill has never been far away, with speculation over potential suitors such as Burnley and West Ham before City's Premier League arrival in August.

Since the season ended however, such stories became harder to bat away with vacancies at Villa and Liverpool arising last month. Reports had suggested Lambert was unhappy with the Carrow Road transfer budget made available to him ahead of next season's task of securing a third Premier League term.

With Lambert on a 12-month rolling contract, a final compensation figure is said to be around �1m – some way short of the �5m-plus that Swansea have secured from Liverpool for Brendan Rodgers, due to him signing a new long-term deal earlier this year.

Lambert's move would see both Norwich and Swansea lose the managers that took them Premier League promotion and survival – to the clubs they faced on the final day of last season. And while QPR's survival meant all three promoted sides avoided top-flight relegation for the first time in a decade, the trio will all have new men at the helm for 2012-13, with Mark Hughes having only recently taken over at Loftus Road.

Reports early yesterday morning suggested Lambert had offered to resign – and after a few minutes' notice the club released their one and only statement at 2.37pm.

'The club regrets to confirm that Paul Lambert has offered his resignation from his position as Norwich City manager. We have fought hard to keep Paul at Norwich City and have not accepted his resignation whilst discussions with another club are taking place.

'However, whatever happens, we want to place on record our sincere gratitude for everything Paul has done for the club over the last three fantastic seasons.

'When Paul joined us in August 2009 we were in 66th position in the English football pyramid and the club was on the brink of financial meltdown. Today we are a Barclays Premier League football club, on a financially sound footing and with a stadium full to capacity.

'Discussions with Paul throughout the last few days have been professional and amicable. Paul has already earned his place in Norwich City Football Club history and, no matter what happens, will always have a friendly welcome at Carrow Road.

'Meanwhile, contrary to some media speculation, the club does not need to sell any players and the finances are in place to substantially strengthen the excellent squad which helped us finish in 12th position in the Premier League last season. Rest assured that everyone behind the scenes at Carrow Road remains absolutely focused on continuing to help the club progress.'