KEVIN Keegan is resigned to losing out on Richard Dunne after Tottenham Hotspur last night emerged as favourites to land the unsettled Manchester City defender.

Dunne's decision to turn down a long-term deal at Eastlands has alerted a number of Premier League clubs.

City owner Thaksin Shinawatra could now be prepared to cash in on the defender, who will be available on a free transfer at the end of next season.

Several players, Dunne included, have become increasingly frustrated by the uncertainty surrounding the future of City boss Sven Goran Eriksson, who has been linked with the Mexico national job.

And with the former England coach expected to leave his post early next week, Dunne could lead the City exodus, with Micah Richards and Michael Johnson also weighing up their options.

Spurs are likely to be the first to test City's resolve by tabling a £5m bid for the Republic of Ireland international.

Sunderland, Arsenal and West Ham have also been linked with a move for the 28-year-old.

However, any hopes Newcastle boss Kevin Keegan has of bringing Dunne to Tyneside could be scuppered by the player's wage demands.

Keegan has been told that there will be limited funds available, with owner Mike Ashley keen to take a more cautious approach in the transfer market in a bid to reduce the club's massive wage bill.

And there is little chance that Ashley will be held to ransom, despite Keegan's interest in a player who was one of the top defenders in the Premier League last season.

Instead the Magpies boss is likely to scour Europe for bargains and follow the lead of Arsenal boss Arsene Wenger, who has unearthed a number of topclass players costing next to nothing.

Meanwhile, James Milner continues to be linked with a move away from St James' Park, with Liverpool, Everton and Aston Villa reportedly interested in signing the 22-year-old.

Keegan has no intention of parting with the former Leeds United winger, but a bid in the region of £5m could tempt the Tynesiders, especially given Ashley's plans to improve the club's financial position.

Milner, who has also been linked with a move to North-East rivals Middlesbrough, almost joined Villa last year before the deal fell through at the eleventh hour after the club's had reportedly reached agreement on a £4m fee. Milner previously enjoyed a successful season-long loan at Villa Park, prompting Martin O'Neil to seek a permanent deal in August last year.