Milford, who joined the Knights in April on a deal until the end of this season, informed his teammates on Monday that he had accepted a two-year contract with the Dolphins.

Preparing to enter the NRL competition in 2023, the Dolphins will be coached by Wayne Bennett, who has a close relationship with Milford dating back to their days together at the Brisbane Broncos.

It is understood that Millford and his young family were keen to return to their home town.

O'Brien said on Friday he was hopeful of retaining Milford beyond the end of this campaign.

"I've expressed a desire to Anthony himself that I classify him as a real valuable part of our team ... I'd love for him to stay," O'Brien said.

But after Milford's confirmation, O'Brien will have to consider the short-term value of continuing to pick him for Newcastle's remaining seven games of the season, and weigh that against the potential benefits of reinstating Jake Clifford.

Clifford is under contract to the Knights next season but, since Milford's arrival, he has played in only two of Newcastle's past nine NRL matches.

Clifford has been a regular in NSW Cup but was a late scratching from last week's clash with Blacktown Sea Eagles after contracting COVID.

It is expected he will be available for Friday night's clash with Sydney Roosters at McDonald Jones Stadium.

The Knights have won only two of the seven games in which Milford has played.

Clifford and Adam Clune, who started the season as Newcastle's first-choice halves, are both contracted for next year and might again have to handle the playmaking responsibilities in 2023, depending on whether the Knights are successful in their quest to sign an experienced halfback.

After Newcastle's 42-12 loss to Manly on Saturday, their already-slim finals hopes would appear dead and buried.

Yet when asked at the post-match press conference on Saturday whether he would start looking towards next season, O'Brien replied: "I don't want the team to look at next year now, and I certainly won't be either."

He added that Newcastle's priority was "to be better against the Roosters" than they were against Manly.

"I'm more focused on that, because that will help us long-term," he said.

"That will help us next year, if we get better next week."

The last time the Knights played against the Roosters, at the SCG in round one, they produced a boilover to win 20-6 and Clifford was named man of the match.