However, he did not succeed in taking Ayr back to the Premier League and was dismissed in 1993 for adverse results with the side's place in the First Division in serious jeopardy.
Burley was appointed manager at his former club, with Dale Roberts as his assistant, having had talks with Town without Colchester knowing and so compensation was duly paid.
[citation needed] He made his playing return for Ipswich, ten years after his last game for the club in a match against Motherwell in 1995 although didn't feature again as a player.
Relegation the following season saw Burley's side struggling at the foot of Football League First Division and his contract was terminated by mutual agreement in 2002.
[10]Burley again showed interest in the Ipswich job following Mick McCarthy's exit in 2018, but he again lost out in favour of Paul Hurst.
[11] In November 2002, Burley was on the verge of taking over as Stoke City manager, but he had a late change of heart and declined the offer.
This showed through in the 2004–05 season when, despite spending no money on new players, Burley transformed Derby from relegation contenders to a fourth-place finish and play-off semi-finalists.
A stunning start to his tenure as Hearts manager saw them top the Scottish Premier League after the first ten games, winning eight of these, including a 4–0 victory over rivals Hibernian – proving themselves to be genuine title challengers.
However, he left the club the day after major shareholder Vladimir Romanov, with whom Burley had a notoriously uneasy relationship, announced a bid to take private control of Hearts.
He guided Southampton to the 2006–07 play-offs but lost on penalties in the second-leg of the semi-final after drawing 4–4 on aggregate against his former club Derby County, who went on to win the final.
In the following two friendlies, Scotland failed to register a victory, with a 3–1 loss against the Czech Republic, and a goalless draw with Northern Ireland.
Although winning 2–1 against Iceland in their second game of the 2010 World Cup qualifying campaign, Burley received heavy criticism for the 1–0 defeat to Macedonia in the opening match and a 0–0 home draw against Norway.
Questions were raised about his choice of bringing on uncapped Chris Iwelumo (who missed an open goal from 3 yards) instead of proven-goal scorer Kris Boyd.
The team lost 4–0 to Norway in their next match, putting Burley's bid to take Scotland to the World Cup for the first time since 1998 in jeopardy.
Scottish FA chief Gordon Smith moved to confirm that Burley's position was not under threat, but said that much depended on the final two matches.