"This decision has not been made quickly," said Zola in a statement on the Watford website. "I must place Watford Football Club first in my thoughts and it is for this reason that I have taken my action.
"I feel it is in the best interests of the team that somebody new is given the chance to bring the success which we have all hoped for and worked very hard for."
The Championship side lost in the play-offs last season and are currently 13th in the table.
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