Fabio Capello has claimed the Football Association was in breach of contract by stripping John Terry of the England captaincy against the Italian's wishes earlier this year, interference that left the then national coach "pissed off" and prompted his resignation from the position he had held for four years.

The 66-year-old, who departed the England job in February, was unveiled as the new Russia manager in Moscow on Thursday after signing a £7.8m-a-year contract that will take him initially through to the World Cup in Brazil in 2014.

Capello insisted he was "forbidden" to speak about his time with England under the terms of his severance package, but he could not disguise his frustration that he was not in charge of the national team at Euro 2012 and even suggested he would have taken the side further than the quarter-final achieved by his successor, Roy Hodgson.

"If I were with your guys [England] during the European Championships, it would have been even better," Capello said. "We had qualified for the finals and it was only the John Terry story that meant I couldn't go to the finals. On that issue with the English federation [the FA], with my contract, it was put down on paper that the decision as to who would be captain should be made by only the coach. It was down on paper, in the contract, in black and white."

That much is disputed by the FA which is comfortable that no breach of contract occurred. Indeed, a spokesman confirmed: "Fabio Capello's representatives have since acknowledged, in writing, that the FA had the fullest authority in dealing with the matter [of the captaincy]."

Terry had been deposed having been charged with a racially aggravated public order offence – for which he was acquitted at Westminster magistrates court earlier this month – during Chelsea's defeat at Queens Park Rangers last October.

Capello always maintained that the centre-half should retain the armband and was innocent until proven guilty, eventually resigning when the FA insisted Terry had to be stripped of the honour. The Italian's contract with England was due to expire after Euro 2012, for which the team had qualified top of their group, with a settlement reached over the remaining months of the deal. "However, with that contract I had in England, I was forbidden to speak about the English national team," he said. "That's why I cannot tell you anything now. I would like to, but I am bound by that clause in the contract.

"But I'd worked there for four years and, after what happened, I was pissed off, you know, and I wanted to stop. Every national coach works for two years towards a goal – that is the ambition of every coach – but I was not given the opportunity to fight for the Euros with England.

"When you are told this is the goal [and then things change] … If you are always interfered with, you don't feel well. You feel ill at ease and pissed off. I wanted to be the main guy with the national team again and to take a team to Brazil. I wanted that again."

Capello – who rather cryptically went on to add he had actually "achieved everything I had wanted to achieve in England" – had initially hoped to return to management in the Premier League, and had expressed an interest via third parties in the Chelsea position, before the Russian Football Union targeted him as Dick Advocaat's replacement. The former Milan, Roma and Real Madrid manager admitted he will face difficulties communicating with his new players – the language barrier had been an issue while with England – but is confident he will be able to guide Russia to their first World Cup since 2002.

He will be accompanied by five compatriots, including Franco Tancredi and Italo Galbiati who worked with him with England, and intends to spend a large part of the year living in Moscow. Capello's role appears more far-reaching than that enjoyed with the FA, with the Italian also charged with monitoring the progress of Russia's youth teams as a generation of older players who have long been mainstays of the senior side reach the twilight of their careers at this level.

"The goal is the World Cup in Brazil," Capello said. "I believe that Russian players are excellent. They're world class. However, we need to change their mind-set. At this level, it's often in your head. This is a new cycle in my career, but I will try and do my best to train the Russians for Brazil. That is our priority. Doing well there."

He intends to travel to Germany to attend Arsenal's friendly with Cologne on 12 August to speak face to face with the current Russia captain, Andriy Arshavin, whose criticism of the national side's supporters at Euro 2012 has drawn fierce local criticism. The acting president of the Russian Football Union, Nikita Simonyan, confirmed it will be Capello's decision if Arshavin retains the armband.

"I'll speak with him and ask him why this disrespect for fans took place," added Capello, whose first game in charge will be a friendly with the Ivory Coast on 15 August. "As far as his captaincy is concerned, I need to meet him first and understand what kind of situation there is, and what the atmosphere is like between him and the Russian fans. We will talk about his captaincy as well." His first competitive match will be the World Cup qualifier at home to Northern Ireland on 7 September.