The Manchester United boss plans to offer the injured Germany captain a one-year contract at Old Trafford with an option of a 12-month extension, according to reports.
Freebie: Manchester United have reportedly entered the race to sign free agent Michael Ballack
With reports suggesting United's American owners are over a £1billion in debt, resources could be thin for Ferguson this summer, who may be forced to scour the free market having already spent £7.5million on Mexican recruit Javier Hernandez.
Ballack, who has never endeared himself to United players and fans in the past, is wanted by a host of elite European clubs with Real Madrid and Tottenham also said to be keen to on the 33-year-old.
But a return to former club Bayer Leverkusen is off the cards for Ballack after the Bundesliga club conceded the player's wage demands would prove too excessive.
Sidelined: Ballack is out of the World Cup with an ankle injury
Werder Bremen have distanced themselves with a move for the same reasons but it is understood new Wolfsburg manager Steve McClaren is interested in a deal.
Missing from the World Cup, Ballack is currently recuperating from an ankle injury he sustained during Chelsea's FA Cup win over Portsmouth last month.
Ballack scored four goals in 38 appearances last term to help the Blues to the title but he was released after snubbing a 12-month
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