Graham Arnold will step down as Socceroos manager before Australia’s next World Cup qualifier in October.

Sources familiar with negotiations told AAP that Arnold has been in dialogue with Football Australia this week, ironing out an exit strategy from a role he has held since 2018.

Arnold’s departure comes after the Socceroos picked up just one point from a possible six in their opening two games of third round World Cup qualifying.

Australia fell to Bahrain earlier this month and then were held scoreless in a 0-0 draw with Indonesia.

FA released a statement from CEO James Johnson on Friday morning.

“Graham Arnold’s departure marks the endof an era for Australian football,” he said.

“His contributions to the sport and the Subway Socceroos are there forall to see. Under Graham’s leadership, we achieved remarkable milestones that elevated Australian football on the global stage. Graham’s passion and dedication have left an indelible mark on the teamand Australian football.

”While we respect his decision and are saddened to see Graham leave the national team set-up, this scenario is not uncommon in international football. We will act swiftly in appointing a new head coach to ensure continuity and stability, particularly as we approach the crucial second window of the AFC Asian Qualifiers next month.

”Our focus now shifts to finding the right candidate who can build upon the foundations which Graham leaves behind and guide the team forward with confidence. Time is of the essence, and we are fully committed to making the transition as smooth as possible to keep the Subway Socceroos on track for continued success.”

In his six-year reign, the 61-year-old has overseen Australia’s best-ever finish at a World Cup and two quarter-final exits at the Asian Cup.

Arnold went precariously close to getting the sack in 2022 when Australia blew their hopes of direct World Cup qualification and had to rely on Andrew Redmayne’s penalty shootout heroics against Peru to get to Qatar.

Once there, Australia knocked over Denmark and Tunisia before narrowly falling to eventual winners Argentina at the last 16 phase.

Following Australia’s performance in Qatar, Arnold was rewarded with a new four-year deal by FA and turned down approaches to coach at club level to guide the Socceroos to the 2026 tournament, which will take place in USA, Canada and Mexico.

Arnold said in June of this year that he believed he had a squad capable of reaching the semi-finals in North America in two years’ time.

But the former Sydney FC and Central Coast Mariners boss has opted to walk away from the final two years of that deal after an underwhelming start to the third round of qualification.

The Socceroos suffered a shock 1-0 loss to Bahrain on the Gold Coast before a frustrating stalemate against Indonesia.

Those two results in which the Socceroos failed to score, have left Australia second bottom in group C and their hopes of securing a top-two finish and automatic qualification on shaky ground.

The Socceroos host China in Adelaide on 10 October before heading to face undefeated Japan in Saitama on 15 October.

Arnold was visibly frustrated after the Indonesia draw and vowed to go away and have “a really good think about things.”

While many interpreted that throwaway line to suggest he would revamp his squad and tactics - Arnold’s critics have frequently bemoaned Australia’s lack of cutting edge against perceived “smaller” teams - the Socceroos manager has instead been considering his position.

Arnold met FA bosses earlier this week and it is believed that he indicated he would be willing to step aside after a challenging six-year reign.

His likely exit leaves FA facing a mad scramble to find a coach to step into the role on an interim basis as they continue a search for the next permanent Matildas coach.

The Socceroos will need to announce a squad for the October window fixtures with China and Japan in a little over a fortnight.