Marcello Lippi, the man who led Italy to their fourth World Cup title in 2006, has been re-appointed as the coach of the national team following Roberto Donadoni's departure.
Donadoni parted company earlier today after Italy were knocked out of Euro 2008 at the quarter-final stage by Spain on Sunday.
Lippi, who has been out of coaching since leading the Azzurri to their World Cup triumph in Germany, will be unveiled at a press conference in Rome next Tuesday but told the Italian media that he was "very, very, very happy and very motivated".
Donadoni had signed a new contract extension prior to Euro 2008 but one of the conditions of the deal was for the World champions to reach the last four.
The Italian Football Federation (FIGC) activated a 10-day get out clause that applied to both Donadoni and the Federation after a meeting at the FIGC’s headquarters in Rome today.
Donadoni, a former AC Milan player, succeeded Lippi in 2006 but the FIGC said his tenure had "run to its natural expiry date".
"While confirming his sincere respect for Donadoni on a personal level and for the dedication and professionalism of his work at the helm of the national team, President [Giancarlo] Abete informed him of the decision to bring his contract to an end," the FIGC statement read.
The Azzurri were largely uninspiring in Austria and Switzerland yet did manage to qualify from the so-called 'Group of Death' which contained France, Netherlands and Romania.
A 3-0 defeat to the Dutch in the opening Group C game was followed by a 1-1 draw with Romania. They squeezed through to the quarter-final stage after beating Les Bleus 2-0 but then lost on penalties to Spain after a goalless 120 minutes and Donadoni paid the price.
The former Livorno boss, who guided Italy to 13 wins, five draws and five losses, said he was pleased with what he had achieved as national coach.
"I'm sorry that a penalty kick has decided this situation," said the 44-year-old. "Over these last two years, my Italy also did something positive, and one last game can't erase that.
"I don't have the foggiest idea what I will do in the future. I've got to digest this and then start anew," he added.
Lippi, who was initially appointed in place of Giovanni Trapattoni following Italy's elimination from Euro 2004, will take charge of his first game against Austria in a friendly international in Nice on August 20 before kick-starting the defence of their World Cup with the qualifying campaign for South Africa 2010 in September.
In his first spell between 2004 and 2006, the former Juventus coach picked up 17 victories, 10 draws and just two defeats in 29 matches in charge.
Angelo Peruzzi, Italy's third-choice goalkeeper at the World Cup, is likely to be named an assistant coach to the 60-year-old Lippi, and former Italy defender Ciro Ferrara could also rejoin the backroom staff.
Marcello Lippi factfile
Playing career: Sampdoria (1969), Savona (1969-1970), Sampdoria (1970-1980), Pistoiese (1980-1982).
Coaching career: Ponterdera (1985-1986), Siena (1986-1987), Pistoiese (1987-1988), Carrarese (1988-1989), Cesena (1989-1991), Lucchese (1991-1992), Atalanta (1992-1993), Napoli (1993-1994), Juventus (1994-1999), Inter (1999-2000), Juventus (2001-2004), Italy (2004-2006, 2008- ).
Honours: World Cup (2006), Champions League (1996), Serie A (1995, 1997, 1998, 2002, 2003), Intercontinental Cup (1996), European Supercup (1996), Coppa Italia (1995), Supercoppa Italiana (1995, 1997, 2002, 2003).