O'Neill, whose last managerial job was at Villa Park, has been regularly tipped for vacant posts at high-profile teams in the last 12 months and was the bookmakers' favourite.

The Black Cats are 16th, two points above the relegation zone, which led to Bruce's sacking on Wednesday.

The team has won only two of their 13 league games this season.

O'Neill, a former Nottingham Forest player, built his managerial reputation at Wycombe Wanderers before successful spells at Leicester City and Celtic.

He joined Villa in 2006 and led them to three straight sixth-placed finishes in the Premier League and the Carling Cup final before resigning before the start of the 2010-11 season.

He is understood to have met Sunderland's owner and chairman Ellis Short on Thursday evening in London, to negotiate a deal.

One of the key aspects of the agreement is said to be O'Neill's agreement to the budgetary constraints at the Stadium of Light.

Sunderland's next fixture is a Premier League game against Wolves on Sunday, but O'Neill is expected to take charge after that game.

The club is thought to have had O'Neill as their preferred choice to replace Steve Bruce.