"Georgy Dermendzhiev is the new Bulgarian national team coach. All has been agreed, he's the new manager. We'll finalise the documents tomorrow," Bulgarian Football Union vice president Yordan Lechkov was quoted as telling sportal.bg sports website on Monday.
Dermendzhiev confirmed the news to another sports website, gong.bg, adding that he expected to sign his contract "today or tomorrow".
The 64-year-old coach is one of Bulgaria's most successful club managers. He led Ludogorets to three Bulgarian league titles from 2015 to 2017 and to the group stages of the 2015 Champions League.
After Ludogorets, he coached Kazakhstan's Ordabasy before briefly taking the helm at Levski Sofia.
Balakov, who took over the national team in May, quit on Friday after the Euro 2020 qualifiers loss against England.
Monkey chants and apparent Nazi salutes during the game sparked a storm of indignation, prompting the resignation of Bulgarian Football Union's president Borislav Mihaylov and the organisation's whole executive committee.
Bulgaria are in a hurry to pick a new coach ahead of their last Euro 2020 qualifying game against the Czech republic on November 17.
Bulgaria are last in Group A but still have a chance to qualify for the Euros through the play-offs.