Kenny Dalglish rejoined Liverpool after Roy Hodgson's departure last January but failed to make significant improvements in his second time at the club and has now left his manager's post at Anfield. The 61-year-old has paid the price for the Reds poor performances in the Barclays Premier League, reports BBC Sport.
The Scot's departure comes after he held face-to-face talks with principal owners John W Henry and Tom Werner in Boston on Monday.
A statement from the club said:
Henry said: "Kenny will always be more than a championship winning manager, more than a championship winning star player. He is in many ways the heart and soul of the club. He personifies everything that is good about Liverpool Football Club. He has always put the Club and its supporters first. Kenny will always be a part of the family at Anfield.
"Our job now is to identify and recruit the right person to take this club forward and build on the strong foundations put in place during the last 18 months."
The Liverpool chairman Tom Werner said: "Kenny came into the club as manager at our request at a time when Liverpool Football Club really needed him. He didn't ask to be manager; he was asked to assume the role. He did so because he knew the club needed him. He did more than anyone else to stabilise Liverpool over the past year-and-a-half and to get us once again looking forward. We owe him a great debt of gratitude.
"However, results in the Premier League have been disappointing and we believe to build on the progress that has already been made, we need to make a change." "Kenny Dalglish is to leave his post today as manager after having his contract terminated. After a careful and deliberative review of the season, the club came to the decision that a change was appropriate. It is not a decision that was reached lightly or hastily. The search for a new manager will begin immediately."
