The Italian Football Federation (FIGC) have announced their decision to part company with Roberto Donadoni following a meeting with the coach in Rome today.
The 44-year-old's position had been under threat after it was confirmed yesterday that his contract would only have been automatically extended to 2010 if the Azzurri had reached the semi-finals of Euro 2008.
A quarter-final penalty shoot-out loss to Spain on Sunday put paid to that, leaving the FIGC to decide Donadoni's future whithin ten 10 days of the Euro exit.
"The Italian Football Federation would like to confirm that Donadoni's contract has been allowed to expire," read an official statement from the FIGC.
"President of the Federation [Giancarlo] Abete met Donadoni today and during the course of the meeting they reviewed the work done over the last two years and at the European Championships.
"While stressing his sincere respect for Donadoni on a personal level and for the dedication and professionalism of his work at the helm of the national team, the President informed him of the decision to bring his contract to an end."
Marcello Lippi, who led Italy to World Cup glory in 2006, is the favourite to replace Donadoni and the Italian media are speculating that he could be presented to the media as early as next week after reportedly holding talks with FIGC officials yesterday.