The 61-year-old wants to bring his own four man, all Italian, backroom team with him to lead England to the 2010 World Cup - it includes two renowned coaches, a goalkeeping expert and fitness trainer.
Shearer A Fish Out Of Water In New Regime?
But the FA insist they want an England connection, in the shape of Alan Shearer, in the 'Team Fabio' set up.
Capello seems to have reluctantly agreed, and is expected to sign a £6.5m-a-year contract later today.
Shearer, now a pundit on Match of the Day, had been among the frontrunners for the England job when Steve McClaren was sacked last month.
Where this puts Shearer is a little unclear at the moment. It hardly seems the ideal situation, as Capello insists he wants to be his own man without FA interference.
It seems obvious that the FA see Shearer as the next England boss, after he learns the ropes from the Italian.