Australia set to appoint New South Wales Waratahs coach Michael Cheika as head coach after Ewen McKenzie resignation

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New South Wales Waratahs coach Michael Cheika has agreed in principle to replace Ewen McKenzie in charge of the Australia team, the Australian newspaper reported on Monday citing "an informed source".

Cheika led the Waratahs to the Super Rugby last season, completing a unique coaching double after he guided Irish province Leinster to a Heineken Cup triumph in 2009.

The report said Cheika was hoping to retain control at the Waratahs and combine that role with his duties as national coach in the lead-up to next year's World Cup in England.

An Australian Rugby Union (ARU) spokesman said on Monday they were "still in the process of investigating options to replace Ewen McKenzie".

"At this stage, no prospective coaches have been confirmed in the role - but we hope to have a solution in place and announced before the team leaves for the Spring Tour on Friday," he added in an e-mailed statement.

McKenzie dramatically resigned a few hours before the Wallabies lost 29-28 to New Zealand in Brisbane on Saturday amid the turmoil caused by utility back Kurtley Beale allegedly sending offensive text messages to a team official.

Cheika's record makes him the favourite for the job ahead of World Cup-winning former South Africa coach Jake White, who was sounded out to replace Robbie Deans in July last year only to lose out to McKenzie.

The ARU is keen to appoint a coach before the squad depart for their tour of Europe, which features a match against the Barbarians and tests against Wales, France, Ireland and England.

ARU chief Bill Pulver said they would consider a caretaker coach if it was not possible to make a permanent appointment in time.

With no June tests and a curtailed Rugby Championship next season, however, that would allow the new coach precious little time to put his imprint on the squad.

Other candidates mooted in local media were Australia's World Cup-winning former flyhalf Stephen Larkham, who is coach of ACT Brumbies, and Melbourne Rebels and former Munster coach Tony McGahan.

Brumbies chief executive Doug Edwards said on Monday he would be hugely surprised if Larkham was not in Canberra next season.

"You never say never, but I would be extremely surprised if they appoint Stephen as the Wallabies coach," he told the Sydney Morning Herald.

"He's here for next year. He's very committed to Australian rugby and if there's a way he could help out, I'm sure he would if there was a way that would fit.

"But he'll stay at the Brumbies next year."

Reuters