Marsch had emerged as the frontrunner to take the reins at the King Power following the sacking of Brendan Rodgers just over a week ago.
On Saturday, it was said that the former Leeds boss was on the verge of being appointed by the Foxed but on Sunday night reports emerged claiming that the deal was now off.
The club are desperate to appoint a new head coach quickly with caretaker managers Adam Sadler and Mike Stowell overseeing poor defeats against Aston Villa and Bournemouth in the days following Rodgers’ dismissal.
These results, plus Leicester’s poor form since the World Cup, have left the 2015/16 Premier League champions 19th in the table and at serious risk of relegation to the Championship.
Now, two possible contenders have emerged, with The Athletic reporting that Smith is already in ‘advanced discussions’ to take charge of the club on an interim basis until the end of the season.
The former Brentford and Aston Villa boss has been out of work since December since getting sacked by Norwich and could bring ex-Leicester manager Craig Shakespeare back to the King Power as his No.2.
Alternatively, Fabrizio Romano claims Leicester have opened talks with Benitez who is interested in returning to management has spoken to the Foxes to discuss his long-term plan and contract.
The former Liverpool, Chelsea, Real Madrid and Newcastle man recently spoke of his desire to be back in the dugout having been out of work for a year following his disastourous spell at Everton.
Whoever the Foxes choose will likely be appointed this week in time for Saturday’s trip to title-chasing Manchester City.
Leicester are two points away from safety and have a reasonable run-in to the end of the the season with games against relegation rivals Wolves, Leeds, Everton and West Ham still to come.
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