Paul Collingwood admits England's imminent series-clinching victory over Australia is "a near-perfect way to go" after announcing his retirement from Test Cricket.

The 34-year-old England batsman told his team-mates of his decision before start of play on the fourth morning of the final Test against Australia in Sydney.

With England on the verge of winning the Ashes outright in Australia for the first time in 24 years having already retained them, Collingwood - who has been out of form in this series - has chosen a watershed moment to call time on his 68-Test career.

He was part of the team which won the Ashes in 2005 for the first time in 18 years - albeit featuring in only the last Test at The Oval - then lost 5-0 in Australia four years ago, but retained the urn in 2009.

After England moved within three wickets of a series-clinching victory on the fourth day of the final Test in Sydney today, Collingwood was in buoyant mood.

"I'm absolutely chuffed to bits," he told Sky Sports 1. "I've got mixed emotions, obviously I made the announcement this morning to retire from the Test form of the game but the way we've played this kind of cricket here has been fantastic.

"It's put a huge smile on my face and we're in a great position in this match to win the series."

As for his decision to call it a day, the Durham native said: "I discussed it with my wife (Vicky) a couple of weeks ago in Melbourne, and once you start discussing it with your family, that's pretty much it.

"I decided 100% a few days ago when I came here and played the first day and I pretty much knew it would be my last innings. I wanted to go out on a major high and make a big contribution but it didn't work - I don't think I'm built for fairytales to be honest!

"I'm very proud, I'm very happy with what I've done in my career. I think it's the right time to go. This England team is moving forward and progressing all the time. Unfortunately I'm not going to be there but it's up to the younger lads to come through.

"We've got some exceptional players coming through and I think it's time for them to have a good go.

"I wanted to go out there and if I'd scored a fifty or hundred it would have been the perfect way to go but this is close to perfect. Obviously playing against Australia, in Australia, we've had some lows out here in the past but to do what we've done on this tour so far - and hopefully win the series tomorrow - this is a near-perfect way to go.

"I'm very realistic. I haven't had the best series, I haven't been in the best form in Test cricket over the past six months . I know where I am as a player and probably know where I am in the selectors' minds and stuff. I think it's time for the younger guys to have a go."

Collingwood has no doubts there are plenty of able candidates to step into his shoes.

"I think this team can go on to bigger and better things," he said.

"There's probably going to be another ginger on his way in, to be honest - Eoin Morgan's probably got a good chance. But there's a lot of good players out there."

Collingwood has a career average just above 40 and has made 4,259 runs - including 10 centuries.

The Durham batsman began his Test career against Sri Lanka at Galle in 2003.

He has also played in 189 one-day internationals for his country, is a former captain of that team and last year led England to their first International Cricket Council global trophy when they won the World Twenty20 in the Caribbean.

He will continue as England's Twenty20 captain and as a member of the ODI squad.

He said: "Clearly I still feel I have a huge amount to offer England in terms of limited-overs cricket - and I'm looking forward to the opportunity to continue leading the Twenty20 squad and playing a significant role in England's ODI team."

That opportunity will come first in seven ODIs and two Twenty20s against Australia, immediately following the Ashes series, and then England's attempt to win the World Cup for the first time - on the sub-Continent from mid-February.

Hugh Morris, managing director of England Cricket, paid tribute to Collingwood's achievements.

"Paul Collingwood has made an outstanding contribution to the England Test team," he said.

"His performances have been admired and recognised by his team-mates and England supporters over many years, and his tireless commitment in the Test match arena will be something he will always be remembered for.

"I'm delighted that Paul will be available to continue to make important contributions to our ODI and Twenty20 teams."