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  The former England boss won just six of 28 Premier League games in charge of the Magpies, who are just one place off the foot of the table.
  McClaren and his team were booed off following Saturday's 3-1 loss to Bournemouth at St James' Park - their third successive league defeat.
  However, in a statement McClaren said: "I remain confident that we would have stayed in the Premier League."
  He added: "I am obviously disappointed with the decision.
  "Whilst there has been a lot of intense speculation surrounding my position over recent days, my sole priority has been to maintain my professionalism and carry on with my work to best prepare the team.
  "For every supporter of Newcastle, I genuinely hope the club can produce the results I believe they are capable of to maintain their Premier League status."
  McClaren's future has been a source of almost constant speculation since the defeat by the Cherries.
  Match of the Day presenter Gary Lineker tweeted: "Newcastle have finally put Steve McClaren out of his misery.
  "The running of that great football club is beyond shambolic."
  Ian Dennis, BBC Radio 5 live's senior football reporter, said Benitez had been identified as a replacement for McClaren at a board meeting on Monday.
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  "Rafa in the driving seat to replace McClaren," tweeted former Magpies striker Michael Owen. "Whoever takes over, I still expect Newcastle to stay up."
  McClaren, 54, signed a three-year contract with the Magpies in June after the club avoided relegation on the final day of last season.
  Newcastle's next game is at leaders Leicester City on Monday.
  "After the defeat to Bournemouth on Saturday, the club has spent some time considering its position and has today concluded that Steve McClaren's employment with the club will end with immediate effect.
  "We acknowledge that reaching this decision has taken a number of days and that this has caused uncertainty for everyone involved, in particular for Steve and the players, for which we apologise.
  "However, we felt that this time was necessary to ensure the right decisions were reached with the best interests of the club at heart.
  "Managing director Lee Charnley added: 'I would like to thank Steve personally for his services to Newcastle United.
  "'He is a man of integrity and class and he has conducted himself with great dignity during this difficult time.
  "'Steve worked tirelessly to try and bring success to Newcastle United.
  "'He has the utmost respect of all the players, staff and management and he leaves with our very best wishes and sincere thanks.
  "'We feel that a change is now needed in order to give the club the best possible chance of securing its Premier League future. A further announcement on a successor to Steve will be made in due course.'"
  Former Newcastle defender Steve Howey agreed with Lineker that the club's handling of McClaren's sacking had been "pretty shambolic".
  He added: "That seems to sum Newcastle up at the moment.
  "Everyone thought after the defeat by Bournemouth there would be discussions straight after the game with the board - which Steve is on - and a decision could be made before the new week started.
  "It dragged on and, to be fair to Steve, he's shown superb professionalism. He's carried on knowing all along that he was going to be leaving."
  BBC Sport's chief football writer Phil McNulty:
  Steve McClaren was an uninspired, seemingly safe, appointment by Newcastle United after they escaped relegation from the Premier League on the final day of last season.
  Dismissed by Derby County after they failed to reach the Championship play-off despite strong financial backing, McClaren arrived as damaged goods.
  He was fortunate to get the job and it proved comprehensively beyond his capabilities, despite an £80m expenditure since the summer, resulting in just six wins and a place in the relegation zone.
  But how much influence did McClaren have over transfer policy? Chief scout Graham Carr appears to wield the power, but McClaren took responsibility.
  This unwieldy system must be scrapped and the manager must be allowed to manage, otherwise Newcastle will never escape the shadow hanging permanently over this giant of a club.
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  McClaren spent about £80m on players during his time at St James' Park, including £30m on midfielders Jonjo Shelvey, Andros Townsend and Henri Saivet in January.
  However, the signings have failed to help improve the club's form and they have won just one of their past six league games, conceding 14 goals in defeats by Watford, Everton, Chelsea, Stoke and Bournemouth.
  As well as Newcastle, Derby and England, McClaren has managed Middlesbrough, Dutch side FC Twente and Wolfsburg in Germany.
target: Newcastle United have sacked head coach Steve McClaren.