Italy's plans for a smooth build-up to their crunch Euro 2016 clash with Spain on Monday suffered a blow after World Cup-winning coach Marcelo Lippi walked away from a key post with the Italian football federation (FIGC).

Lippi, who led the Azzurri to their fourth World Cup triumph in 2006, was set to become Italy's new technical director, a post that would have seen him oversee an all-new federation programme.

He was set to work alongside former Torino coach Giampiero Ventura, who will replace Italy's Chelsea-bound current coach, Antonio Conte, as national boss later this summer.

But the fallout from a conflict of interest has ended Lippi's hopes of joining the FIGC and helping to revive the national team after years of mismanagement and mediocre performances on the pitch.

Lippi's son Davide has worked as a players' agent for over 10 years -- meaning Lippi's appointment would be against federation rules.

FIGC president Carlo Tavecchio took the case to a federal court for clarification and their ruling is set to be delivered by the end of June.

Lippi, however, delivered a pre-emptive strike when he refused the post claiming his appointment would be "manipulated" against him.

FIGC president Carlo Tavecchio, speaking to media at Italy's Euro 2016 training base in Montpellier on Friday, said he regretted Lippi's decision.

"You all know how much I wanted Lippi to become the technical director of the national team," said Tavecchio.

"But when you're faced having to interpret a legal issue, I immediately requested guidance from the federal court. I had no choice.

"I can understand his (Lippi's) regrets."

Lippi on Thursday appeared to grow tired of waiting. He told Tavecchio by phone that he would be walking away from the project.

"I'm leaving. I told the president this morning," Lippi was reported as saying on a website report by La Gazzetta dello Sport.

"I'm very sorry about this, but I'm leaving because I understand what is going to happen in the future and I don't like it."

Lippi is considered one of the world's most successful football coaches, having won a World Cup, five Serie A titles, an Italian Cup, the Champions League, three Chinese Super League titles, an AFC Champions League, one UEFA Supercup and one Intercontinental Cup.

He also remains the only coach to have won the UEFA Champions League and the AFC Champions League.

Although there remains a slim chance the federation could bend its rules, Lippi added: "Even if we manage to circumnavigate this problem, I know what would happen.

"The situation would be manipulated, and I don't want that to happen. I want to safeguard the job of my son, who has worked in the profession for more than a decade."

Italy, who lost the Euro 2012 final 4-0 to Spain, face Vicente del Bosque's men in Paris on Monday looking to bok their place in the quarter-finals.