Chelsea and City were two of 12 leading European clubs to sign up to the breakaway league on Sunday.
Chelsea, Man City to pull out of European Super League: reports
Chelsea and Manchester City are set to withdraw from proposals for a European Super League on Tuesday after a furious backlash against the controversial plan.
But reaction to the incendiary scheme has been scathing, with politicians and football authorities threatening to take legal action against the so-called "dirty dozen" and potentially ban them from domestic leagues.
Manchester United, Liverpool, Arsenal, Tottenham, Juventus, Inter Milan, AC Milan, Real Madrid, Barcelona and Atletico Madrid were the other 10 sides to agree to the plan.
However, reports have emerged that Atletico and Barcelona are both also considering withdrawing.
Chelsea and City's decision to backtrack could spark the collapse of a project that has sparked outrage across the continent.
The Athletic and the BBC reported that Manchester United executive vice-chairman Ed Woodward has resigned.
Earlier on Tuesday, UEFA president Aleksander Ceferin told the clubs it was not too late to admit they had made a mistake.
"Gentlemen, you made a huge mistake," said Ceferin.
"Some will say it is greed, some complete ignorance of England's football culture. There's still time to change your mind. Everyone makes mistakes."
Over 1,000 fans gathered outside Chelsea's Stamford Bridge stadium to protest against the plan ahead of Tuesday's Premier League match against Brighton.
Less than two hours after the protesters made their feelings known, it was first reported that Chelsea are preparing documentation to become the first club to withdraw from the competition.
The BBC reported that Blues owner Roman Abramovich is understood to have driven the decision.
Former Chelsea goalkeeper Petr Cech, now the club's technical advisor, had come out of the stadium in a bid to persuade fans to clear the roads as the home side's team bus was held up by the protest, causing kick-off to be delayed by 15 minutes.
Cech was heard shouting "give us time" before being drowned out by angry protesters.
The 20-team competition was designed by the European giants to guarantee revenue from regular matches against one another without the risk of failing to qualify for 15 founder members.
The 12 teams had signed up to share an initial pot of over 3.5 billion euros.
However, the plan was fiercely criticised by even their own players and managers for acting as a closed shop.
"It's not a sport when the relation between effort and reward doesn't exist," said Manchester City boss Pep Guardiola.
"It's not a sport when success is already guaranteed, it's not a sport if it doesn't matter if you lose."
Manchester United forward Marcus Rashford shared an image on Twitter of one of the banners which covers the stands at Old Trafford.
The banner carries a quote from the club's legendary former manager Sir Matt Busby, which reads: "Football is nothing without fans".
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