Keegan loses fight as Newcastle get ready to sell Milner to Villa for £10m

Newcastle boss Keegan had set out two main objectives before he met Ashley, managing director Derek Llambias and Dennis Wise in a key strategy meeting - to agree the terms of a new contract for Michael Owen and fight off interest in Milner.

Final score: James Milner's deflected goal against Coventry could be his last in Newcastle colours

However, Newcastle's own website revealed yesterday that the England Under 21 forward had handed in a transfer request just hours after Keegan had said it would be unthinkable to let him go.

Milner actually issued a transfer request on August 20, but an agreement from both parties to keep the matter quiet until after last night's meeting was broken, angering Mick McGuire from the PFA, who represents the player.

'I was asked by Newcastle United to keep the matter private,' he said. 'The request was given because the player was looking for an improvement on his contract that reflected his development and his value to the club. There is a meeting between the owner and all relevant people at the club today when we believed James' request was to be discussed.'

Aston Villa manager Martin O'Neill, a long-term admirer of the player, now looks set to push through a £10million deal, although Liverpool, who tried to broker a swap deal for Milner earlier in the summer, remain keen.

Any sale will be seen as further undermining Keegan's position. He met with Llambias immediately after Newcastle's Carling Cup victory at Coventry about possible signings and his mood is said to have darkened afterwards.

I haven't got enough players,' he said. 'My optimism gets less the nearer that you get to the deadline. I'm still hoping that we'll get a couple in, but if we don't, we'll just have to soldier on.'

On Owen, who is now into the final year of his contract, he added: 'I am not trying to be awkward. Michael is a very special player. He is very important to this club and my vision for it.

'If other people do not share that, it is their problem. I do not say these things publicly for any other reason than I believe it.'

Villa have already had one £8m bid for Milner rejected but a further £2m on top of that will ensure that the player returns to a club where he was on loan two seasons ago. O'Neill was boosted yesterday when midfielder Gareth Barry pledged to stay at the club.

With Nicky Shorey suffering from a slight knee ligament injury, Barry is poised to play at left-back tonight against FH Hafnarfjordur. O'Neill said he was relieved at the outcome and added: 'When we played at Reading in a friendly, early in August, I had resigned myself to the fact that Gareth would no longer be here. The squad went to Malaga training and he didn't come with us.

'I assumed everything would be done in that week. But to still have him here would be a really big bonus.

'I'm now hopeful he will stay with us. It's a great relief and a great delight. I think I speak for a lot of people when I say that.'