Chelsea and Man City 'withdrawing from European Super League'
Owner Roman Abramovich is understood to have driven the decision, having listened to fan protests and opted to pull out of the new European league plans, reports the PA news agency.
Chelsea are the first of England's 'Big Six' clubs to choose to quit the competition, which was only announced on Sunday night.
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Hide AdManchester City refused to comment on reports they too plan to quit when contacted by PA. A spokesperson said: "We cannot comment for legal reasons."
Atletico Madrid and Barcelona have reportedly also withdrawn, but it is understood Manchester United and Liverpool have not changed their position.
Abramovich's motivations are thought never to have been about money, and the Blues are now understood to be preparing documents to withdraw formally from the competition.
Stamford Bridge chiefs were only thought to have signed up as a founder member of the Super League in order not to be left behind by the rogue breakaway.
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Hide AdBut after resounding condemnation from across the political and sporting spectrum, Chelsea appear to have decided to pull out of the competition - less than 48 hours after it was announced.
Chelsea fans launched a mass protest outside of Stamford Bridge, with banners criticising the club for their decision to join the controversial Super League.
Scores of fans chanted, let off blue smoke bombs and marched around the west London ground, with police attempting to control the crowds.
Former Blues goalkeeper Petr Cech, now a technical advisor at the club, spoke to some supporters and could be heard saying "give everybody time" in a video posted on social media.
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Hide AdFormer Chelsea winger Pat Nevin, working as a pundit for BBC Radio 5 Live, saw his old club's withdrawal as the first brick in the wall that will bring the rest down with it.
He said: "If you suppose to put up a brick wall and show everybody this solidarity... it needs one brick to fall. If that one brick's fallen tonight and it's Chelsea, it's gone.
"I actually think it's completely gone and it's dead in the water, and we can get back to something approaching normality and arguing what the Champions League's going to look like next season. It is that big, one club coming out of it."
Brighton boss Graham Potter welcomed the update, telling Sky Sports: "If we are in a place where it is stopping, that is fantastic news."
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Hide AdPlans for the competition had been "unanimously and vigorously" rejected by the other 14 members of the Premier League earlier on Tuesday, while a number of high-profile players spoke out against the competition.
Manchester City midfielder Kevin De Bruyne posted on Twitter: "This man comes out a little town out of Belgium dreaming of playing at the highest stage possible.
"I have worked and competed against everybody trying to win the ultimate. But the most important word in this is COMPETING.
"We know this is a big business and I know I am part of this business. But still I am a little boy who just loves to play football.
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Hide Ad"It's not about a certain entity in this case, it's about the football over the whole world. Let's keep inspiring the next generation of footballers and keep the fans dreaming."
Manchester United defender Luke Shaw expressed his concern that the "changes could impact the sport that I and millions of others love".
He added on Twitter: "We've been without supporters in stadiums for over a year now and I know how much myself and the team have missed them in each and every game.
"Fans and players should always have a voice and their opinion should always be counted."