Premiership coach Wayne Bennett is in line to make a stunning return to St George Illawarra next season after announcing he will leave Newcastle at the end of the year.

The messiah, who brought the title to Wollongong for the first time, has had a difficult tenure since he joined the Knights. Trials included the spinal injury to Alex McKinnon and Nathan Tinkler's fall from grace as club owner.

The Dragons on Thursday said they had not spoken to Bennett about a comeback.

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However, a source told the Mercury the deal could be announced as early as next week.

In a statement, boss Peter Doust said he has kept his options open as they pursue a long-term replacement after Steve Price was sacked earlier this year.

"At the time of announcing Paul McGregor as caretaker coach of the Dragons at the end of May, we also advised that we would be undertaking a detailed process to identify a head coach for next season and beyond," Doust said.

"We don't believe it appropriate to speculate on our progress or the candidates. This process is ongoing and yet to be finalised, once a decision is made we will communicate accordingly."

While the future of interim coach McGregor is unclear, it is believed he may be asked to stay on as an assistant to Bennett, as Rick Stone did when the 64-year-old arrived in Newcastle.

When Bennett first came to Wollongong in November 2008, McGregor, then a strength and conditioning trainer, was among coaching staff shown the door.

A comeback would be well received among the playing group, especially those who were part of the 2010 premiership win, NSW State of Origin and Dragons prop Trent Merrin said.

"I'd love him there," he said.

"I respect him as a coach and as a friend.

"But in saying that, Paul McGregor is doing a top job there at the moment and he's got everyone's total respect."

Asked if Bennett could repeat his magic in Wollongong a second time, Merrin said: "That all depends on the players buying into it. [But] he's got that respect and I've got faith the boys would buy into it."

Bennett denied having spoken to the Dragons.

"That drive is still there to coach ... I'll make another decision about where my future is," Bennett said.

Speculation remained about interest shown by the Gold Coast, Brisbane and the Warriors but it is understood the Dragons were expected to re-sign Bennett.

Bennett doesn't believe he's leaving Newcastle stranded by walking away from the club, although the Knights and the NRL were desperate to see him stay.

The club had slowly started to get back on track in recent weeks after its administration had been taken over by the NRL.

In many ways the Knights will have to go back to square one given the enormous pulling power Bennett has for big-name players, sponsors and fans.

Kangaroos and Queensland marquee Darius Boyd has a close relationship with Bennett and the club's chances of retaining his services appear to have taken a significant hit.

Bennett said he was "embarrassed" by his poor record at Newcastle since he joined the club with lofty expectations of premiership success in 2012.

"The NRL and those that are running the club at the moment were keen for me to stay but I've been here three years and I don't think our performances, particularly this year, have been satisfactory," he told a media conference.

"I'm most disappointed with what we've done and it gives someone else an opportunity to come and see what they can do.

"The overall performance was the catalyst for me. I'm extremely disappointed. I'm embarrassed by it. No, I don't feel that [I'm walking away from unfinished business]. I've done as good a job as I can do."

Knights captain Kurt Gidley had expressed how important it was for Bennett to stay, given the role he'd played in holding the team together amid the McKinnon tragedy and Tinkler's drawn-out demise.