Tottenham's 5-0 defeat at home to Liverpool on Sunday was the final nail in the coffin for Villas-Boas, who also suffered a 6-0 defeat at Manchester City last month.
Spurs are just five points off fourth-placed title favourites Manchester City, but they have the worst goal difference in the top half of the table, with the Liverpool defeat being their worst at White Hart Lane in 16 years.
Villas-Boas has been condemned for failing to get the best out of the players the club signed in the summer with the funds raised from the sale of Gareth Bale, with Roberto Soldado and Erik Lamela yet to deliver in particular.
Meanwhile, Capello is currently preparing for Russia's World Cup campaign in Brazil next summer, where they'll face Belgium, Algeria and South Korea in Group H.
Sky Bet's Dale Tempest said: "The writing appeared to be on the wall for Villas-Boas from the moment the final whistle went at White Hart Lane on Sunday and we cut him from 8/1 to 1/4 to be the next Premier League manager to go in the aftermath.
"Capello has been linked with an array of top jobs in England since his time in charge of the national side and may well have his head turned by the Spurs role if they come knocking, as his Russia side are 66/1 outsiders at the World Cup."
Swansea boss Michael Laudrup is second favourite at 9/2 while former Tottenham players Glenn Hoddle and Tim Sherwood are also in the running at 8/1 and 10/1 respectively.