Michael Owen is facing a £2m pay cut as Keegan and Ashley strike a fragile truce at Newcastle

Ashley called for an end to the civil war tearing the club apart as Keegan emerged from an, at times, heated four-hour showdown with his job intact.

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But the manager was told that money for transfers is tight and that captain Owen will see his current £120,000-a-week pay slashed by £2m a year if he wants a new contract to start in a year's time.

Ashley called the meeting at his Freshfields offices in London in a bid to end the friction between the manager who guided his team to Barclays Premier League safety and scouting directors Dennis Wise and Tony Jimenez.

Chairman Chris Mort and new vice-chairman Derek Llambias were also present.

As expected, Keegan will remain as the Newcastle boss for next season, but he has been told in no uncertain terms that outbursts such as last week's, when he appeared to criticise Ashley and the money available for transfers, will no longer be tolerated by the tough-talking billionaire businessman and his boardroom team.

The summer war chest will be around £20million, but if the manager wants more money he will have to sell first.

Keegan has been seeking assurances that Owen's future will be sorted as he has just one year left on his contract.

So far, after six weeks of talks, the two sides have failed to negotiate a new deal. His prospective pay cut amounts to £2m a year.

The former England manager is also hoping he will have the last say on transfer targets as London-based Wise and Jimenez scour the globe for young talent.

Keegan wants players with Barclays Premier League experience — not least Owen who he wants on a long-term contract.

After the clear-the-air meeting, chairman Mort said: 'It was a good meeting. It was both productive and constructive.'

In the wake of the 2-0 defeat by Chelsea on Monday, Keegan suggested he would not get the financial backing he needed this summer, and also hinted at frustrations with the chain of command which allowed Wise a major say in player recruitment.

Before travelling to the capital, Keegan insisted he would not change his style.

He said: 'Part of my job as manager of Newcastle United is to tell fans what's happening at their club. Part of the media's job is to report it correctly, and keep it in context and not go off on tangents.

'I'll continue to do what I've always done while I've been manager of Newcastle United, and at Manchester City, Fulham, and England. I haven't changed. I'm not scared of saying what I think the situation is and I won't change that.'

Keegan arrived back at St James' in January promising to provide the fans with exciting football and the prospect of a return to the lofty heights Newcastle briefly scaled during his previous spell in charge.

If his thoughts are now tinged with a little more realism after four months at the helm, he is no less determined to bring the good times back to Tyneside.

In the short term, that will mean ending a difficult season on a high at Everton tomorrow, where his side will take on a team looking to cement the fifth place Keegan believes has to be his goal for next season.

He said: 'That's our main target next year and that's a very good target to set ourselves from where we are at the moment.'

A positive result at Goodison Park would see Keegan overtake the club's Premier League low points total of 43 under Glenn Roeder last season, something Keegan set as a target several weeks ago.

They will have to do it without key players, however, with striker Mark Viduka anxiously awaiting news of his Achilles injury which could yet rule him out for six months, and midfielder Joey Barton unavailable because of bail conditions relating to the city of Liverpool.

It is a measure of how much Barton has progressed under Keegan that he will be missed this weekend.

The 25- year-old, a £5.8million Sam Allardyce signing, endured a slow start to his Newcastle career after suffering a metatarsal injury in pre-season.

But he has started 13 of the last 14 games and is once again looking like the player he was at City.

Keegan said: 'Joey can be really pleased with his performances. What he has done here is win over the fans — he has certainly won over a lot of his team-mates, who didn't know quite what he was like before.'