England boss Fabio Capello has been linked with a shock return to Real Madrid as the Spanish giants begin preparations to replace Manuel Pellegrini this summer.

Inter Milan boss Jose Mourinho is the favourite for the post but Chelsea coach Carlo Ancelotti and Liverpool manager Rafa Benitez are also understood to be on Real's four-man short list to take charge at the Bernabeu this summer.

Madrid are locked in a battle at the top of La Liga with rivals Barcelona, but Spanish daily Marca - seen as a mouthpiece for club insiders - report that ruthless president Florentino Perez is already mulling over a replacement for Chilean coach Pellegrini.

The Real McCoy: Fabio Capello has been linked with a surprise return to Madrid

Real suffered a humiliating early Champions League exit at the hands of Lyon last week - their sixth successive failure at the first knockout round stage - despite spending almost £250million on new recruits, including £80m Cristiano Ronaldo.

Under pressure Pellegrini, who was not Perez's choice for the manager's job when he arrived from Villarreal nine months ago, knows he faces an uncertain future even if he does win the title this season. The club infamously sacked Capello under identical terms during his second spell in charge at the club.

Despite winning the championship in 2007, the club's early European demise that term signaled the end of the Italian's reign before he accepted the England job later that year in December. German Bernd Schuster suffered a similar fate in 2008.

 
Looming prospect: Pellegrini faces the sack with Mourinho favourite for the job

Capello, however, has stated several times that he intends to see out his contract with the Football Association which runs until 2012 meaning Mourinho is Real's priority.

Having guided FC Porto, Chelsea and Inter Milan to domestic titles, the Portuguese coach has the required pedigree to land the Bernabeu post, particularly having won the Champions League before in 2004.

Crashing out: Real, with Ronaldo, fell at the knockout stage to Lyon last week

Under the terms of Mourinho's existing three-year deal with Inter, he can leave at any time he desires.

But the 'Special One' admitted after Tuesday's Champions League win over his former club that he would prefer a return to England should he decide to quit Italy.

Benitez and Ancelotti remain alternatives for Los Merengues though, with both bosses under considerable pressure at Anfield and Stamford Bridge respectively.