'I knew nothing about the move' - Walter Smith talks to Radio 5 Live

But Smith admitted he was stunned by the news that his star striker was moving to St James' Park in a £7m deal.

He even appeared on television after Everton's 1-0 win over Newcastle on Monday to deny rumours of the move, before being told Ferguson had in fact been sold.

"I am disappointed at Duncan leaving and I am also disappointed with the circumstances in which the transfer has taken place," Smith said.

Smith: Furious with the Everton board

"I was unaware the transfer was going through until 11pm last night, so it was disappointing to me in both aspects."

But he dismissed reports that the transfer could end his five-month tenure at Goodison.

He revealed he had decided to stay after holding clear-the-air talks with the board on Tuesday morning.

"After finding out about it all last night, I had to sit down and take stock," Smith said.

"The easiest thing would have been to make a knee-jerk reaction, but we have spent a fair amount of money this season and I felt for myself that it was the right thing to stay and try and work our way round the problem instead of walking away."

Frank Hargreaves: "It's a disgrace" (BBC Radio 5 Live)

But Smith has been told he cannot have any of the £7m Ferguson fee to buy new players and Frank Hargreaves of the supporters group 'Everton for Goodison' said the decision to sell Ferguson without replacing him was "nothing short of suicidal".

Shearer 'stays say Newcastle'

The arrival of Ferguson at Newcastle looks likely to be the start of the long-awaited Ruud Gullit revolution.

Ferguson has agreed a five and a half year contract and will complete the move to St James' Park if he passes a medical - but the transfer has immediately raised questions over the future of Newcastle striker Alan Shearer.

Alan Shearer: Where does his future lie?

Club chief executive Freddie Fletcher said: "The board has signed Duncan Ferguson to partner Alan Shearer. The object is to have two really class strikers playing up front for Newcastle United."

But there appears to have been a breakdown in communication between manager and player.

Shearer said he had no plans to leave and was waiting for confirmation from Gullit: "As far as I am concerned I am staying at Newcastle United - but at the moment I really don't know what the board and the manager are thinking.

"I love this club in a way that only a Geordie could understand and nothing in my career could ever be better than helping to win something for our magnificent supporters."

But Gullit is not as certain about Shearer's commitment: "I don't know if he as a player really wants to stay, and that is the point," he said.

A controversial figure

Ferguson has rarely been out of the limelight since starting his career at Dundee United in 1990. He won his first Scotland cap two years later before moving on to Rangers for £4m.

His Rangers debut against Raith was memorable for two reasons, he scored in a 4-0 win but was then involved in a head-butting incident with Raith's John McStay.

The clash led to him appearing in court charged with assault and he was sentenced to three months imprisonment. A 12-match ban imposed following the incident was eventually lifted, but Ferguson served six weeks of the prison term.

He moved on to Everton for £4m but missed Euro 96 because of injury and later announced his retirement from international football in order to focus on his club career.