According to The Sun, the 54-year-old specialist will now be sold during this transfer window to free up extra cash as the Red Devils manager eyes defensive replacements.
West Brom manager Tony Pulis has looked at bringing in Smalling this summer along with Phil Jones.
Arsenal have even shown interest in snapping-up the ex-Fulham ace, who would cost around £12m.
Mourinho is believed to have told United chiefs they can sanction a sale for the centre-back within the past two weeks.
He wants at least one more defender despite bringing in £35m Victor Lindelof from Benfica earlier this window.