Leicester manager Gary Megson has been granted permission to speak to Bolton by chairman Milan Mandaric.
Megson emerged as Phil Gartside's first choice to succeed Sammy Lee last week and The Foxes had previously rejected two approaches for their manager by the Trotters chairman.
But following talks on Tuesday night between Megson and Mandaric, the former West Brom and Nottingham Forest boss will be allowed to talk to Bolton.
Megson informed Mandaric that he wanted to become Bolton manager after Leicester's 1-0 defeat to Sheffield United.
Gartside has since reiterated his desire to appoint the 48-year-old and a compensation package has now been agreed between the two clubs.
Disappointed
"It is with disappointment and great reluctance that I have today agreed to allow Gary Megson to open talks with Bolton Wanderers regarding their vacant managerial position," Mandaric said in a statement.
"Despite my best efforts to retain his services and turning down two formal approaches from Bolton, Gary left me with no choice last night when he informed me he wanted to leave Leicester and talk to the Premier League club.
"I made it abundantly clear that Bolton's interest was neither welcome or invited but it was evident to me that following a meeting requested by Gary following last night's home defeat by Sheffield United that his loyalties and heart lay elsewhere."
Talks between Megson and Bolton are expected to begin imminently, with the Premier League club keen to have a new manager in place ahead of Sunday's game against Aston Villa.
Bolton are currently bottom of the table and parted company with Lee after just nine league games this season.
Former Newcastle and Blackburn manager Graeme Souness had been interviewed for the vacant post at The Reebok Stadium but pulled out of the running to replace Lee on Tuesday.
Real Sociedad manager Chris Coleman and ex-Wigan boss Paul Jewell had also been linked, but it appears Gartside's search may now have ended.
Foxes hunt begins
Meanwhile, Leicester have announced that assistant manager Frank Burrows and Gerry Taggart have been placed in caretaker charge at The Walkers Stadium.
Mandaric added: "The search for a new manager begins in earnest.
"In the meantime assistant manager Frank Burrows and Gerry Taggart will assume temporary control of first-team affairs until we are in a position to announce a significant appointment."