With an explosive offence but disastrous defence, the Indianapolis Colts are the perfect project for Tony Dungy.

Dungy, 46, reached an agreement in principle to become head coach of the Colts on Tuesday.

He was fired by the Tampa Bay Buccaneers eight days ago.

Ray Anderson, Dungy's agent, and Colts president Bill Polian are working out final details on a five-year contract worth $13 million US.

"Both parties expect things will go smoothly," Polian said. "An official introduction of coach Dungy is expected tomorrow (Wednesday)."

Dungy was a candidate for the Carolina Panthers' head coaching position.

But he was also "very interested" in the Colts, who boast quarterback Peyton Manning, two-time NFL rushing champion Edgerrin James and receiver Marvin Harrison.

"He was, by far, the best candidate out there," Colts owner Jim Irsay said. "Tony is a proven winner and an ideal type leader who we want to represent the horseshoe.

"We weren't going to be outbid for Tony Dungy. He was going to be a Colt, for sure."

The major problem in Indianapolis is a defence which yielded an NFL-high 486 points this past season and cost head coach Jim Mora his job.

Polian urged Mora to fire defensive coordinator Vic Fangio and, when the coach refused, he was dismissed on Jan. 8.

Polian has sacrificed defence in fitting huge contracts for Manning, James and Harrison, plus tight ends Marcus Pollard and Ken Dilger, under the salary cap.

Enter Dungy, who turned the Buccaneers into one of the league's stingiest defensive teams.

He compiled a 54-42 record in six years with the Buccaneers, but had little luck choosing capable offensive coordinators.

Tom Moore remains offensive coordinator with the Colts.

Before Dungy arrived in Tampa Bay, the Buccaneers had endured 13 straight losing seasons.

He is the only winning coach in a mostly dismal history of the franchise.

But after the Bucs reached the NFC championship game two years ago, they fell short of expectations with back-to-back first-round playoff losses to the Philadelphia Eagles.

Tampa Bay went 2-4 in playoff games under Dungy and failed to score a touchdown in its final three postseason contests.

Believing they could lure two-time Super Bowl winning head coach Bill Parcells out of retirement, the Buccaneers fired Dungy on Jan. 14, two days after a 31-9 loss to the Eagles in the NFC wild card round.

However, Parcells politely turned down Tampa Bay.

The Colts made back-to-back playoff appearances in 1999 and 2000 under Mora, but slipped to 6-10 this past season.

Indianapolis lost seven of its last nine games and allowed 27 or more points in eight straight before a season-ending win over the Denver Broncos.

The Colts also lost James to a torn ACL after an Oct. 25 road win over the Kansas City Chiefs, but rookie free agent Dominic Rhodes stepped in and rushed for 1,104 yards and nine touchdowns.