Reports emerged in the Italian media earlier this week that Capello, who was appointed England coach on 8th January, was under investigation by the tax authorities in Italy as part of a wider probe by the Prodi government, cracking down on tax evasion.

Investigators are reviewing Capello's tax affairs stretching back to 1999, when he began a five-year spell in charge of AS Roma. However, it is believed that the focus of the probe is on his time in charge of Turin club Juventus from 2004 to 2006, and in particular, on lucrative sponsorship deals, including with the designer glasses brand Zerorh+.

Various UK newspapers have carried reports that Capello paid EUR10 million in sponsorship earnings during this time to a Luxembourg-registered company named Sport 3000, which is supposedly held by a family trust that, according to the Guardian newspaper, was until recently based in Guernsey, but has since transferred to the United States.

Capello's current employer, the Football Association (FA), has said that it knew about the investigation, which has been ongoing for around a year, when the Italian was interviewed for the job of England coach at the end of 2007, but was satisfied with his assurances that it would not uncover any illegal financial conduct.

The FA has also pointed out that it pays Capello's reputed GBP6 million salary, net of tax into a British bank account, on the basis that he is a UK resident. However, the British press, so often the nemesis of England football coaches, has since revealed that Capello has 'previous' when it comes to tax avoidance. According to the Daily Telegraph, Capello was fined GBP2,800 by Swiss authorities after it was discovered that he faked an address to reduce his tax liability. The Guardian also reported that he paid a fine five years ago in connection with the falsification of documents affecting his tax status in the Italian region of Lombardy.

In response to the allegations, Capello has confirmed that his tax affairs are under investigation, but he is insistent that the affair will not uncover any wrongdoing on his part.

"With my advisors, I have always endeavoured to conduct my financial business with integrity," claimed a statement from Capello camp, published on the FA's website on Wednesday.

"I have assured The FA today that my finances are in order and that I am not aware of any matters which would be of concern. I understand that these inquiries in Italy are part of a wider investigation into the finances of many high-profile individuals," the statement added.

An FA spokesman commented:

“It is our understanding that the Italian tax authorities are currently following a procedure of looking into the finances of numerous high profile individuals – particularly in sport."

“We have spoken to Fabio and his advisors about today’s newspaper report in Italy and they have explained the facts. They have also given us their assurance that Fabio’s tax payments are in order."