Chelsea have reached an amicable financial settlement with former coach Claudio Ranieri, the English premier league club said on Monday.

Ranieri, with three years left to run on his contract, was sacked by Chelsea on May 31 and replaced at Stamford Bridge by Jose Mourinho, who guided Porto to the Champions League crown last month.

"We have fully honoured the terms of Claudio's contract and we wish him good luck for the future," a spokesman for the club told Chelsea's website.

"Our discussions with Claudio regarding the terms of his departure were at all times amicable. We are pleased we have been able to agree this so promptly."

Ranieri, who led Chelsea to a second-place finish in the premier league behind champions Arsenal and the semi-finals of the Champions League this season, is poised to return to former club Valencia.

The Spanish Primera Liga champions said last week they had agreed personal terms with the 52-year-old, who coached at the Mestalla between 1997 and 1999.

"I am grateful for Chelsea's help in bringing this to a swift conclusion and allowing me to take the next step in my career," Ranieri said, adding that the terms of the settlement were subject to a confidentiality clause.

Bruce Buck, chairman of the club's holding company Chelsea Village, told Sky Sports Television that Chelsea would not have tried to block a move to another club.

"If he has another job we wish him well," he said.

"Our relationship with Claudio has been excellent. We thought it best for the club that we change manager at this point but our relationship with Claudio was excellent and will continue to be excellent in the future."

Chelsea added that Ranieri's three aides, assistant Angelo Antenucci, fitness coach Roberto Sassi and goalkeeper coach Giorgio Pellizzaro would also be leaving the club.