Manager sets pre-departure deadline to remove 'break' clause as he prepares to name final 23-man squad

Fabio Capello will sign a new contract with the Football Association by the time that the England squad fly to South Africa tomorrow morning, after he told the governing body that his future must be resolved before he departs for the World Cup finals.

It is expected that the revised contract will not include the clause that allows Capello and the FA to terminate the deal this summer on reduced compensation terms. The FA has been forced into action by the interest in Capello from the Internazionale president, Massimo Moratti, who has been actively pursuing him to replace Jose Mourinho as the Italians' coach.

Capello and his advisers were adamant that they would not negotiate with the FA while they were at their Royal Bafokeng training camp during the tournament itself. The FA had initially suggested that this was the plan of action on Saturday ,but it sped things up yesterday with Capello speaking to Sir Dave Richards, chairman of the new "Club England".

Yesterday, the newly installed Club England managing director, Adrian Bevington, was finalising the contract details with Capello's lawyer, his son Pierfilippo.

Speaking on Italian television on Sunday night, Moratti suggested he would make an approach for Capello if the clause in his FA contract had not been deleted. Both parties had originally agreed that they would get rid of the proviso, which would entitle either of them to terminate the deal without having to pay the full compensation, but the FA's lawyers had been delayed by Lord Triesman's resignation as chairman.

With the potential that the FA could spend the whole tournament unable to negotiate with Capello and anxious that he would be able to walk away to Inter after the World Cup, the deal had to be done before the flight to South Africa. The FA has adapted its whole structure in the light of Triesman's resignation, with the Club England organisation now taking charge of all matters to do with the national team.

Capello could sign the contract as late as tomorrow morning. Today he announces the seven players from his 30-man provisional squad that will be cut. Gareth Barry has been told he will not be picked unless the FA medical examination concludes he can train with the squad by the end of the week.

Capello has given the midfielder every chance to prove his fitness after damaging ankle ligaments playing for Manchester City against Tottenham on 5 May. Barry arrived at the England team hotel, The Grove in Hertfordshire, last night and will have a scan this morning. He is confident he will make it.

If after the scan Capello's medical staff are satisfied that the injury is healing – and it is anticipated that Barry will be fit to play only in England's second Group C game against Algeria on 18 June – then he will be selected and, in all likelihood, Tom Huddlestone will be left behind. If not then it looks as if both Michael Carrick and Huddlestone will be included in the 23-man squad.

Even with that pair as back-up, Capello said on Sunday that he expects to start with Frank Lampard and Steven Gerrard – the England team's odd couple – as his two holding midfielders against the United States in the first group game on 12 June. The 23 players will also get their squad numbers today, which will give a clue as to who is Capello's first-choice goalkeeper.

Stephen Warnock, who played not a minute of either of the warm-up games, has emerged as a possibility for the squad as understudy to Ashley Cole at left-back. It was previously assumed that Leighton Baines would get the nod.

Another last-minute decision is between Aaron Lennon and Shaun Wright-Phillips. Lennon had been rated as a certainty but Wright-Phillips impressed Capello against Japan.

Michael Dawson, Scott Parker, Darren Bent and Adam Johnson are the others expected to be left behind by the England manager, although, with his tendency to change his mind at the last minute, even those closest to him are taking nothing for certain. Capello and his general manager, Franco Baldini, will ring the unlucky seven this morning and have until Fifa's 11pm deadline to name their final squad.

Capello said he was grateful for the contribution of all his players during their 10-day break in Austria. "I saw these players [those he did not use in games] during training," he said. "It is important for all 29 players to stay here. I said to them that they are the best English players and for that reason they are here. I am disappointed for them because I have to choose 23 players. They have trained very well and stayed focused, but I have to use 23 players."

He gave the clearest hint that Manchester City's winger Adam Johnson would not make the cut. "Some new players have [come to Austria and] stay with me. It is important for them to know me and I hope for the future [they] will be important players for the national team."