SkyBet Championship: Cardiff City locked in talks with Leyton Orient as Russell Slade looks bound for South Wales
On Monday, Orient rejected an approach by the Bluebirds for Slade, who had been their manager since 2010.
Slade spoke of his frustration at not being permitted by the O's to talk to Cardiff following the League Cup defeat to Sheffield United.
He then handed in his resignation and the O's put Kevin Nugent in charge for Saturday's League One clash against Rochdale.
Cardiff City's legal team are discussing a compensation deal with Leyton Orient, who have referred the matter to their lawyers.
The Welsh side have been without a manager since Ole Gunnar Solskjaer stepped down on 18 September.
Slade - named League One manager of the year for the 2013-14 season - has been one of the favourites to take over since Solskjaer departed.
Cardiff City caretaker managers Scott Young and Danny Gabbidon are "hopeful" prospective new boss Russell Slade can turn the Bluebirds' fortunes around.
Young and Gabbidon will be in charge for Saturday's home Championship match against Sheffield Wednesday and they oversaw Saturday's 2-2 draw at Derby and Tuesday's League Cup defeat by Bournemouth.
Slade, who held talks with Orient owner Francesco Becchetti about his position last week, had said he was "proud" to be linked with Cardiff, who were relegated from the Premier League at the end of last season.
The Bluebirds sacked Malky Mackay in December 2013, with successor Solskjaer departing after less than nine months in charge.
Slade led the O's to third place in League One in 2013-14, but saw his side beaten on penalties by Rotherham in the play-off final.