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Capello set to retire after Euro 2012

England coach Fabio Capello will retire from football after Euro 2012 to "enjoy life as a pensioner", the Italian has announced.

Capello to retire after 2012

• Milner hails Steven Gerrard
• Forum: Who next after Fabio
• Becks surprised by axe

Capello's contract ends after the tournament in two years' time, or earlier if England should fail to qualify, by which time he will be 66.

Speculation had been mounting the FA would be forced to end his £6million-a-year deal prematurely after a terrible World Cup but England's flying start to qualifying for Poland-Ukraine 2012 has made Capello comfortable to confirm he will see out his contract and then call it a day.

England's impressive victories over Bulgaria and Switzerland raised the possibility that Capello could consider another World Cup at the England helm to right some of the wrongs of South Africa.

But asked whether he would be finishing up after Euro 2012, he said: "Absolutely, yes. We have to qualify first of course but after that I will be too old. I want to enjoy my life as a pensioner.''

Capello was happy to discuss Steven Gerrard's performance in midfield, where the injured Frank Lampard's absence has forced a reshuffle that has brought more balance to England's engine room.

Capello said: "For a long time Steven Gerrard played for Liverpool like a second forward. This year he is playing like a midfielder. He has started to play fantastic. He wins back the ball and then makes really important passes.''

Gerrard's contribution to successive Euro 2012 qualifying victories that have yielded seven goals could be bad news for Lampard, even though James Milner is suspended for next month's encounter with Montenegro at Wembley.

Given long-standing reservations about the ability of Gerrard and Lampard to operate side-by-side, Capello cannot accommodate the pair without making a significant tactical change elsewhere, which he is loathe to do.

"I have always said the door is open for all the players,'' stressed Capello. "I have to decide who will come in. After that I will decide who is in the first XI. But these players did very well. They won two games and scored seven goals. Also, they created a lot of chances. This is a nice group.''

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