Keegan has not publicly spoken about the dispute
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City councillors have unanimously passed a motion calling on Newcastle United to end the ongoing crisis over Kevin Keegan's position as manager.
Newcastle Council has urged the club to retain the 57-year-old, saying he is an "asset to the city."
Keegan's eight-month reign looked over on Tuesday, with claims he had either quit or been sacked.
The club said it was in talks with Keegan about his future at the Premier League club.
Keegan has yet to speak publicly about falling out with owner Mike Ashley, a dispute many claim is over transfer policy.
'Adverse publicity'
The uncertainty over Keegan's position has sparked widespread anger among the club's supporters, some of whom have called for Ashley to leave the club.
Nick Forbes, the Labour leader of the opposition on Newcastle City Council, tabled the motion on Wednesday night.
The motion said: "Council recognises the widespread public support for Kevin Keegan, and knows how much he means to Newcastle United fans.
"Council believes that he is an asset to the club, the city and the wider community and expresses its support for his continuation in the role of manager.
"Council regrets the adverse publicity being caused as a result of the current situation and urges Newcastle United and Kevin Keegan to come to a mutually acceptable agreement which will allow Mr Keegan to remain in post and manage the team effectively."
'Special place'
David Faulkner, deputy leader of Newcastle City Council, seconded the motion, saying the situation was affecting the standing of the city.
He said: "Because of the special place of Newcastle United in our community, it affects the reputation of the club and to an extent the city."
The club's latest statement read: "Both the club and Kevin would like to reiterate that Kevin remains as manager. He has not resigned nor has he been sacked."
"Newcastle United Football Club can confirm that discussions are ongoing between the board and Kevin Keegan."
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