Cash-strapped Southampton have refused to comment on reports claiming they have accepted an early payment from Arsenal for Walcott moved to Arsenal in January 2006 as a 16-year-old for an initial £5million fee which could have risen to £12million, based upon his progress.

But Saints are now thought to have accepted a total payment of £9.1million for the England striker, although the club have so far declined to confirm or deny the reports.

The Championship strugglers have managed to reduce their financial losses but continue to face an uncertain future, according to their latest half-year report.

In the six months ending December 31 2007, Saints' loss after tax was £700,000 despite a drop in revenue of more than £5million.

The majority of that improved figure came from the big money sales of Kenwyne Jones to Sunderland and Chris Baird to Fulham.

In his financial statement, acting plc chairman Keith Wiseman said: "The board confirms it is working closely with, and has the support of, its bankers."

But the report warned of "a material uncertainty which may cast doubt about the group's ability to continue as a going concern".