Channel 4 is to axe Paul O’Grady’s chat show after he refused to take a drastic cut in his £2million-a-year salary.

Ogrady’s contract expires at the end of this  year and he is now expected to join Sky in a lucrative deal.

Channel 4 planned to slash the budget on O’Grady’s hit teatime show as it grapples with the recession.

It would have seen the presenter’s salary cut by an estimated 30 per cent. However, he was not prepared to take the pay drop and in the face of a multi-million pound offer from a rival channel, the two parties have agreed to part ways.

The decision will come as a massive blow to the star’s fans who have got used to seeing him every night on terrestrial TV.

It will also mark the end of one of the most successful daytime shows in recent years. The Paul O’Grady Celebs Show has won a string of awards and has in the past attracted 3million viewers.

O’Grady defected to Channel 4 in January 2006 after an ugly falling out with ITV bosses following two successful years doing a similar show.

Earlier this year he said he was prepared to take a pay cut, but admitted he did not know how long he would continue with the show.

He would have lost further money if he had renewed his contract because his own production company, Olga TV, makes the programme.

O’Grady, 54, is just the latest star to have been cut loose by Channel 4. Carol Vorderman left Countdown after she said she was told to accept a 90 per cent pay cut.

The channel’s other tea-time stars Richard and Judy also left when their show was dropped last year.

It is understood O’Grady has been offered a prime-time talk show at Sky One in a deal which insiders claim could top £9million over a number of years. Sky One wants him to help the channel broaden its appeal to women.

This is not the first time the broadcaster has tried to steal O’Grady from Channel 4 having offered him a reported £16million deal in 2007.

The last Channel 4 Paul O’Grady Show is expected to air in December, according to The Mail.

An insider said: ‘Paul has worked for a lot of different broadcasters and he does like a change. He is being offered a lot of money from Sky.’

Sky did not deny it was trying to poach the star but simply said ‘at this stage’ it had no further talent signings to announce.