'It was a decision made during the night, when I didn't get any sleep,' Milan vice president Adriano Galliani said on the club's official television station Studio Milan.

'I thought again and again what I should do and finally I decided that this was the best decision to take.'

The 42-year-old Ancelotti takes over a team lying fifth in the Serie A standings with 15 points, five points off the top following their 1-0 defeat by lowly Torino on Sunday.

A former Milan player whose new contract runs until June 2004, Ancelotti will be unveiled at a news conference on Tuesday at 12 noon (1100 GMT).

Milan, who won the last of their 16 Serie A titles in 1999, said in a statement on their website that Ancelotti's appointment marked the start of a new era.

'The club and Terim departed on good terms. Terim's reaction when he was informed that he had been excused was kind and polite.

'A new chapter has begun. Ancelotti returns to his Milan, where he was a key player. From today it will be a new team.'

Ancelotti was sacked by Juventus at the end of last season after twice guiding them to the runners-up position in Serie A. The Italian media constantly reported that he was on stand-by should Terim fail to establish himself at Milan.

A former Italian international midfielder, Ancelotti helped Milan win the European Cup in 1989 and 1990.

He had also been linked with a return to Parma, who he coached from 1996-98, following the resignation of Renzo Ulivieri last week.

Terim led Turkey to the European Championships for the first time in 1996, and coached Galatasaray to four Turkish championships and the UEFA Cup in 2000.

He managed Fiorentina last season but resigned towards the end of the campaign after problems with the board, having coached La Viola for only 20 games.

Milan midfielder Cristian Brocchi believes Terim, who received a vote of confidence from Galliani after a 1-1 draw with bottom-placed Venezia in mid-October, faced difficulties from the start.

'From the beginning there was a lot of external pressure on Terim as well as many dubious episodes that made one think there wasn't 100 per cent faith in him,' he told Studio Milan.

'But Milan didn't play as it should have done. If we had won all the easier games, which instead we either lost or drew, we would not be comfortably in first place and this certainly weighed on the board's decision.

'The biggest problem was the lack of continuity. At times there was need for a greater desire to win and more aggression.

'This is without doubt a problem for us players. Even though we'll try to immediately to start again with the team but at Milan there are so many great players and this will certainly help Ancelotti's job.'