Melbourne Victory coach Ange Postecoglou has accepted an offer to coach the Socceroos but his club needs to thrash out a compensation deal before releasing him, reports said Tuesday.

Football Federation Australia has made clear they favour a local replacement for German Holger Osieck, who was dumped earlier this month after two successive 6-0 thrashings.

Postecoglou is widely seen as the favourite ahead of fellow A-League coaches Graham Arnold and Tony Popovic and the Sydney Morning Herald reported on its website that he has accepted the job.

"Postecoglou, a former national youth team coach, has always coveted the senior job and accepted the offer that was put to him by the FFA over the weekend," the newspaper said.

But Postecoglou is signed with the Victory until the middle of 2015 and the club is reportedly demanding Aus$1 million (US$964,000) in compensation before releasing him.

Victory chief executive Ian Robson said there could be movement on the appointment soon.

"We might be making some comment later today," he told Fox Sports on Tuesday.

"There are conversations going on and, for the moment, we want to keep those conversations directly with the FFA."

FFA chief Frank Lowy has previously said he does not intend employing a short-term coach, with the chosen candidate leading Australia through next year's World Cup in Brazil, the 2015 Asian Cup in Australia and beyond.

He added earlier this month that a major deciding factor would be making sure the impacted A-League club was left in a stable condition.