Kelly was in the same position at Second Division Tranmere Rovers but the former Blades and Republic of Ireland striker walked out of the Merseyside club after Neil warnock approached him.
However, to make matters worse the Blades are to be investigated by the Football League over the matter after Rovers submitted a statement which read; "consulting lawyers and the Football League regarding breach of contract and Football League regulations by David Kelly and Sheffield United".
Ian Christon, a Football League spokesman said; "At this stage we have had initial contact from Tranmere Rovers over an allegation of an illegal approach for their assistant manager.
"While the investigation is going on it would be inappropriate to comment further."