Waratahs boss Michael Cheika warns that Ewen McKenzie will be chased hard by Ireland © Getty Images

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New South Wales Waratahs coach Michael Cheika believes that while his Queensland Reds counterpart Ewen McKenzie would be highly sought after by Ireland, he shouldn't be lost to Australian rugby.

However that scenario is becoming increasingly likely, with sources revealing that McKenzie is not only on top of the Irish Rugby Football Union's (IRFU) list of candidates to replace Declan Kidney, but that a deal has already been offered to the Reds coach.

"He would do really well over there, but I think he would be a very big loss to Australian rugby. We can't be letting a coach of that quality go overseas," Cheika said.

"What I know is he obviously has very good qualities; he's been successful with NSW, he's been successful with Queensland. I don't think that he should be let go overseas. But he's shown he is prepared to go overseas; he went to Stade Francais and enjoyed it a lot. I'd say they (the IRFU) would be chasing a guy like that real hard."

McKenzie announced on Tuesday he would leave his post at the end of the season as he aims to coach at Test level "either here or overseas".

"Being an ex-player, an ex-Wallaby, being a coach and spending 13 years in Super Rugby, I would love to coach the Wallabies, I have said it many times," McKenzie said.

McKenzie denied his announcement placed pressure on current Wallabies coach Robbie Deans, who comes off contract at the end of 2013 but also wants to keep his job.

"My competition is not with Robbie. I don't decide that job, and nor does Robbie. In the end other people make decisions about his employment," McKenzie said.

Deans' chances of re-employment appear to rest on how his side performs against the British & Irish Lions, but Ireland's interest in McKenzie may force the ARU to make decisions on the role within the next month.

Ireland is conducting a review after a disappointing Six Nations campaign in which they finished fifth, however Kidney is all but certain to be shown the door.

McKenzie, however, is an admired figure among Australian rugby fans and losing him to Ireland would not be well received.

The 48-year-old already has connections in the Emerald Isle though, with former Waratahs assistant coach Les Kiss a long-serving defence coach with the national squad.

McKenzie did his best to play down the Irish links, saying he had not "spoken to anyone from Ireland" and said the timing of his announcement was only to provide certainty to the Reds.

But despite expecting the Wallabies' job to be advertised later in 2013, McKenzie admitted he would look at other opportunities beforehand.

"You can only put an application in when the job is advertised. If someone knows something about when the job is being advertised, let me know. In the meantime I will get on with coaching the Reds, and in the meantime if something else pops up that looks interesting, I will have a look at that," McKenzie said.

"You can't sit there by the phone waiting for one job. Rugby life doesn't work like that."