The 30-year-old's current contract at United is set to expire at the end of the season and the midfielder has managed only 39 appearances during nearly four seasons at Old Trafford.

"This has been a difficult decision knowing how hard the lad has worked to win back his fitness," said Ferguson. "But we have made it in the hope he will be able to resurrect his career elsewhere."

Hargreaves is expected to announce his retirement after struggling with knee problems since joining United from Bayern Munich in a £17million deal in the summer of 2007.