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|Everton caretaker manager Duncan Ferguson. (AFP/Anthony Devlin)|
The Scot has been in the hotseat at Goodison Park for the past three matches following the sacking of Marco Silva, earning a win against Chelsea and a draw with Manchester United in the Premier League before Wednesday's penalty shootout defeat by Leicester in the League Cup.
"Duncan Ferguson will remain as caretaker manager for Everton's Premier League clash at home to Arsenal on Saturday," the club said in a statement.
There have been strong reports that Ancelotti is close to agreeing a deal but, should that happen over the next few days, his first game would now be the Boxing Day home fixture with Burnley.
The 60-year-old Italian was dismissed as manager of Napoli last week despite taking the Italian club into the last 16 of the Champions League after they slipped to seventh in the Serie A table.
Ancelotti spent two years at Chelsea from 2009 to 2011, winning a Premier League and FA Cup "double" in his first season at Stamford Bridge.
Arsenal are understood to be on the verge of appointing Manchester City assistant coach Mikel Arteta.