MILAN (Reuters) - Former Real Madrid coach Fabio Capello has said he would be interested in the England manager's job.

England failed to qualify for Euro 2008 after losing 3-2 at home to Croatia on Wednesday and coach Steve McClaren has been sacked.

The 61-year-old Capello, who achieved huge success with AC Milan in the 1990s and also won Italian titles with Juventus and AS Roma, has often spoken of his desire to coach England.

"It would be a beautiful challenge. I am the right age. It is a battle," Capello told Thursday's Gazzetta dello Sport.

The Italian was dismissed as Real coach at the end of last season despite winning the Spanish title and is now working as a commentator for Italy's Rai television.

He is well aware of England's problems, however.

"There are too many foreign players and the players are used to another way of playing," he said of England while commentating on Italy's 3-1 win over Faroe Islands on Wednesday.

Former Chelsea coach Jose Mourinho is the bookmakers' favourite.

Newcastle United's Sam Allardyce has ruled himself out of the running to replace sacked Steve McClaren as England manager.

"I'm contracted to Newcastle United and from my point of view that contract needs to be honoured," he told Sky Sports News.

"I'm not in a position like I was at my old club where the chairman openly extended the invitation for me to go for the position."

Allardyce, a contender for the England job after the departure of Sven-Goran Eriksson last year, took over at Newcastle in May after being in charge at Bolton Wanderers since October 1999.

(Writing by Mark Meadows; Editing by Ossian Shine)