Daniel Levy has taken the biggest gamble of his time as Tottenham chairman by appointing Tim Sherwood as the club's new head coach despite lining up the vastly experienced Louis van Gaal, BT Sport can reveal.

Sherwood, who has been given the role until the end of the 2014-15 season, forced the issue by insisting on a minimum 18-month contract.

He refused to keep the seat warm for Holland manager Van Gaal, who would have arrived for the start of next season. His contract with the Dutch FA ends after the World Cup finals.

Glenn Hoddle was ready to step in had Sherwood walked away but Levy opted to give his head of football development his big break even though he has never managed at any level before.

Sherwood was initially named interim manager of the north London club following the sacking of Andre-Villas Boas last week.

A statement on Spurs' official website on Monday evening said: "Following the departure of Andre Villas-Boas, the club can announce that Tim Sherwood has been appointed head coach with a contract to the end of the 2014-15 season."

Sherwood was in charge as Tottenham crashed out of the Capital One Cup following a second home defeat to West Ham this season.

But he bolstered his standing by leading the club to a 3-2 victory at Southampton in the Premier League on Sunday.

Chairman Daniel Levy told the club's official website: "We were extremely reluctant to make a change mid-season, but felt we had to do so in the club's best interests. We have a great squad and we owe them a head coach who will bring out the best in them and allow them to flourish and enjoy a strong, exciting finish to the season.

"We are in the fortunate position of having within our club a talented coach in Tim Sherwood.

"We believe Tim has both the knowledge and the drive to take the squad forward."

Sherwood, who made nearly 100 appearances for Tottenham as a midfielder from 1999 until 2003, will be assisted by Chris Ramsey and former Tottenham team-mates Les Ferdinand and Steffen Freund.

Apart from Van Gaal, Ajax boss Frank de Boer and former Real Madrid and Chelsea manager Guus Hiddink were also linked with the post.

An insider close to the Spurs camp told BT Sport:  "No-one saw that coming. Daniel Levy was not sure what to do but it looked as though he was going with Van Gaal for next season.  No one knows what has made him change his mind."