Chelsea and Manchester City are set to pull out of the European Super League, Sky News understands.
Man City said in a statement on Tuesday evening: "Manchester City Football Club can confirm that it has formally enacted the procedures to withdraw from the group developing plans for a European Super League."
While Chelsea are preparing documents to formally withdraw, with club owner Roman Abramovich understood to have driven the decision, having listened to fan protests and opted to back out.
City player Raheem Sterling reacted to the news by tweeting the words: "Ok bye".
Manager Pep Guardiola had previously criticised the plans for the "closed shop" league, as fans from other clubs gathered outside stadiums up and down the country.
UEFA president Aleksander Ceferin said he was "delighted to welcome City back to the European football family".
"They have shown great intelligence in listening to the many voices – most notably their fans – that have spelled out the vital benefits that the current system has for the whole of European football; from the world-beating Champions League final right down to a young player’s first coaching session at a grassroots club," he wrote.
And the FA said: "English football has a proud history based on opportunity for all clubs and the game has been unanimous in its disapproval of a closed league. It was a proposition that, by design, could have divided our game; but instead, it has unified us all."
The move leaves just four English clubs – Liverpool, Manchester United, Arsenal and Tottenham – in the breakaway competition, which has sparked a huge backlash since plans were announced on Sunday.
Fans gathered outside Stamford Bridge to protest on Tuesday, with police forced to close roads and make a number of arrests, and match officials delaying the kickoff of Chelsea’s game against Brighton by 15 minutes.
Reserve goalkeeper and coach Petr Cech was seen outside the ground, among the protesters, appealing for calm.
Supporters clutched placards that read "RIP football" and "No to Super League" ahead of tonight’s match and cheered as news of their club’s decision broke.
Liverpool Captain Jordan Henderson tweeted late on Tuesday that "we don’t like it and we don’t want it to happen", suggesting that his team could be next to pull out.
The team’s time sponsor Tribus said they were leaving them as they "cannot support the move by the clubs’ owners".
At a Downing Street news briefing earlier, Prime Minister Boris Johnson said the UK government would do all it could to prevent the Super League going ahead.
He applauded the news as it broke, tweeting: "The decision by Chelsea and Manchester City is – if confirmed – absolutely the right one and I commend them for it. I hope the other clubs involved in the European Super League will follow their lead."
Culture Secretary Oliver Dowden added: "Good news that Chelsea and City have seen sense, and I urge the rest to follow swiftly.
"The whole ESL move shows how out-of-touch these owners are. They have completely misjudged the strength of feeling from fans, players and the whole country. Football is for the fans."
The Premier League said that it is "considering all actions to prevent the plans from progressing", while FIFA President Gianni Infantino warned that clubs would have to "live with the consequences" of their decisions.
Amid threats of refusing to grant players’ visas and withdrawals of matchday funding, a Spanish court ruled that FIFA nor UEFA should sanction players or teams involved before the Super League had been dealt with properly.
The commercial court in Madrid’s ruling is preliminary, however, and it is not clear if it has jurisdiction abroad.
Real Madrid chairman Florentino Pérez, who is also the chairman of the new league, has defended the concept, claiming it will "save football".
But his predecessor Ramon Calderon told Sky News it would "kill football" and warned that "successful or not, the harm has already been done" among fans.
He said: "It’s a stab in the back of football. Many clubs will disappear, with academies and grassroots.
"I think it’s very sad, disgraceful."
Eyewitness: ‘We’ve just made history’ – Chelsea fans welcome move to pull out
By Enda Brady, news correspondent
"We’ve just made history, we’ve just made history."
The news spread around Stamford Bridge like wildfire, Chelsea had just become the first club to formally withdraw from the proposed European Super League before a ball had even been kicked.
Hundreds of fans had gathered outside the stadium before the club’s Premier League match against Brighton to voice their anger at the project.
One banner, aimed at owner Roman Abramovich read: "18 years, 16 trophies. What legacy?"
Chelsea’s former goalkeeper Petr Cech, now a coach at the club, waded into the crowd urging them to keep calm. He obviously knew that a bombshell announcement was imminent.
And as fans watched the news break on their mobile phones, up went a chant. "We’ve got our Chelsea back, we’ve got our Chelsea back."
One fan held a placard that read simply: "We want our cold nights in Stoke."