FC Porto insist they have not received an offer from Chelsea that meets the €15 million release clause in the contract of treble-winning coach Andre Villas-Boas.
Portuguese news agency Lusa claimed on Monday morning that the Blues had met the financial demands of the Liga club and were on the brink of appointing the 33-year-old as Carlo Ancelotti's successor.
Porto responded to the speculation with a statement that denied they had received a successful bid from Chelsea and that they had no indication from Villas-Boas that he wished to leave the Estadio do Dragao.
"FC Porto, at the request of the CMVM [Portuguese stock market], hereby informs the market that the coach Andre Villas-Boas, as well as several players, has a termination clause.
"To date, we have not received any communication that this clause will be exercised, nor that the coach agrees to such an aim."
Meanwhile, Chelsea said they remain confident they will soon be in a position to make a formal announcement on their new manager, but would not say who they are in negotiations with.
A club spokesman said: "We hope to be able to make an announcement regarding the new manager in the next few days or so, but until then we will not be commenting further on the speculation surrounding that appointment.''
Villas-Boas won the 2010-11 Portuguese League, Portuguese Cup and the UEFA Europa League in his debut season as a manager and was immediately linked with a move to one of Europe's biggest clubs.
Porto president Pinta da Costa said on Monday the club were powerless to prevent Villas-Boas from leaving should his release clause be activated.
He said: "If someone deposits €15million into our account and he wants to go, we cannot do anything because it is something that is contractually specified.''
Villas-Boas became the youngest coach to win a European trophy when his Porto side beat Braga 1-0 in Dublin at the end of last season and despite insisting at the time that he was happy to remain at the club and build a team to compete in the Champions League his future has been the subject of much speculation.
On Sunday, Inter Milan ruled out a move for the highly-rated coach. "Villas-Boas had this clause that we certainly were not going to tackle," Inter president Massimo Moratti said.
Chelsea have been searching for a new manager since dispensing with Ancelotti on May 22 and it was thought that Turkey coach Guus Hiddink, who won the FA Cup as temporary Blues boss in 2009, was first choice to replace the Italian.
However, Villas-Boas, a former assistant to Jose Mourinho at Chelsea, could be destined to follow in the footsteps of his mentor, with whom he has been favourably compared, if the Blues increase their offer.
During his time as part of Chelsea's coaching team from 2004 to 2007, Villas-Boas was responsible for putting together the detailed technical reports on every opponent that was one of the hallmarks of Mourinho's reign.