- Potter has been in talks with owner David Sullivan for more than 48 hours.
- Lopetegui received his marching orders on Wednesday afternoon.
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Graham Potter has agreed to become West Ham's new manager following the decision to sack Julen Lopetegui.
Former Chelsea boss Potter will sign a two-and-a-half-year deal to return to football following his departure from Stamford Bridge in April 2023.
Lopetegui, who still reported to the Rush Green club headquarters on Wednesday before being formally informed of his sacking, will receive just over £3m from West Ham due to a compensation deal in his contract.
There are hopes that West Ham can announce Potter as their new boss on Thursday morning.
Mail Sport revealed earlier this week that Potter had held talks with West Ham owner David Sullivan on Monday, with the talks understood to have taken place at the businessman's personal residence.
Those talks continued into Wednesday morning due to detailed discussions about the length of Potter's contract.
Graham Potter has agreed a two-and-a-half year deal to join West Ham as their head coach.
The club sacked Julen Lopetegui after a tumultuous start to the season on Wednesday.
Owner David Sullivan has been in talks with Potter in a bid to secure his signature.
West Ham initially wanted the former Brighton manager to replace Lopetegui until the end of the season, while Potter wanted a longer commitment.
And all parties are understood to have found a middle ground on what sources say is a deal that will be confirmed to expire in 2027.
It has not been confirmed whether there is a termination clause in the contract
Sources claim that the delay created in agreeing the length of the contract was due, in part, to Everton's interest in Potter.
With this in mind, West Ham put contingency plans in place in case a deal with Potter was not reached.
Christophe Galtier and Paulo Fonseca were expected to replace Lopetegui if Potter rejected West Ham's offer.
But there is already an agreement for Potter to become West Ham's head coach, although it remains to be seen whether he will take charge of Friday's FA Cup third round match against Aston Villa.
Lopetegui has had a miserable run of form and in the last game of his tenure the Hammers lost 4-1 to Manchester City.
Potter was last on a top-flight bench almost two years ago during an unfortunate spell at Chelsea.
Confirming Lopetegui's dismissal, a statement said: “The first half of the 2024/25 season has not aligned with the Club's ambitions and therefore the Club has taken measures in line with its objectives.
The Club can confirm that assistant coach Pablo Sanz, head of performance Óscar Caro, chief analyst Juan Vicente Peinado, physical trainer Borja De Alba and technical coach Edu Rubio have also left with immediate effect.
'The board would like to thank Julen and his staff for their hard work during their time with the Hammers and wish them every success in the future. The process of appointing a replacement is underway.'