The left-handed opening batsman was one of only two players to top 1,000 runs last summer.

And the club had hoped he would replace Vince Wells, stripped of the captaincy despite preserving their top-flight status in both the County Championship and Norwich Union League last term.

Wells is also still to decide on a new one-year playing contract.

But Sutcliffe is now set to move elsewhere, with Lancashire and Nottinghamshire believed to be leading the chase for his services.

Kevin Hill has had an eventful time since succeeding James Whitaker as general manager on Tuesday, although he was boosted by the signing of wicket-keeper Paul Nixon from Kent.

"I'm obviously disappointed Iain has decided to pursue his career elsewhere," Hill said.

"I'd hoped that he and I would work closely together."

Lancashire chief executive Jim Cumbes told BBC Sport Online that he was unaware of reports that Sutcliffe had already been made an offer from Old Trafford.

"In the last two years we have lost four batsmen in Mike Atherton, John Crawley, Graeme Lloyd and Neil Fairbrother.

"We have signed Malachy Loye from Northamptonshire within the last month so [coach] Mike [Watkinson] has been keeping on top of things."