With Wednesday's Copa del Rey match against Melilla fast approaching, the Blancos may be forced to scramble for an interim manager

Real Madrid's negotiations with Chelsea over compensation for Antonio Conte's release have hit difficulties, Goal understands.

Conte is Madrid's first choice to replace Julen Lopetegui, who is set to be sacked on Monday following Madrid's 5-1 thrashing at the hands of rivals Barcelona on Sunday.

The Italian is understood to be interested in taking the reigns at Santiago Bernabeu, but protracted negotiations between Madrid and Conte's former side Chelsea have the Blancos scrambling ahead of Wednesday's Copa del Rey match against Melilla.

Real Madrid reserve team manager Santiago Solari is a candidate to be drafted in as an interim boss as negotiations with Chelsea continue.

Following Sunday's defeat in El Clasico, Madrid made contact with Conte to express interest in bringing the Italian in as Lopetegui's replacement.

The Blancos had previously sounded out Conte in the summer as a potential replacement for Zinedine Zidane, but the Italian had not yet negotiated his exit with Chelsea.

Though Conte is keen to take charge of Madrid, the Italian's compensation package with Chelsea still must be thrashed out after the Blues fired the Italian following the 2017-18 season.

In order to sign with Madrid, Goal understands Chelsea want Conte to forgo a €10 million (£9m/$11m) payment, which is complicating the negotiations between all three parties.

Julen Lopetegui Real Madrid 2018-19

With the clock ticking and Lopetegui certain to be sacked, Madrid have turned their attention towards Castilla boss Solari, who could take charge on a temporary basis.

The 42-year-old was considered for the full-time position, but Madrid's hierarchy instead began to zero in on Conte as Lopetegui's prospects of continuing dimmed.

Madrid have begun their domestic campaign in stuttering form, and have now lost three straight league matches for the first time since 2009.

With the club struggling to replace Cristiano Ronaldo, the axe is set to drop on Lopetegui, who was only appointed in June after Zidane's surprise resignation.

"We have to take a decision. We can't continue like this any longer," a Real Madrid source told Goalfollowing Sunday's defeat to Barcelona.