Smith returns to Rangers

Walter Smith has been appointed manager of Rangers for a second time.

He has quit his post as Scotland head coach to return to the job he gave up in 1998 and has signed a three-year contract.

The Scottish Football Association have confirmed their intention to take legal action against Smith "for breach of contract" and against Rangers "for inducement to breach the contract".

David Taylor, SFA chief executive said: "Walter's departure is a serious blow to the Scottish FA.

"He has done an excellent job for us and the Scottish national team. We are very disappointed that he has chosen to leave us at this critical time in our Euro 2008 qualification campaign."

In a statement, the SFA said: "At a meeting with the chief executive of the Scottish FA, Walter Smith delivered a letter of resignation with immediate effect from his position as national coach of the Scotland team.

"No agreement has been reached with Mr Smith or Rangers Football Club on any compensation payment to be made for the early termination of his employment, which is in breach of his contract with the Scottish FA."

Smith was Rangers executive chairman Sir David Murray's first choice for the position from the moment Paul Le Guen left the club by mutual agreement six days ago.

The 58-year-old Glaswegian led Rangers to seven consecutive league titles before departing for a stint at Everton, which was much less successful.