Harry Redknapp is the strong favourite to replace Fabio Capello as England boss, after the Italian quit with immediate effect.
Capello has left his position after criticising the decision to take the skipper's armband off the Chelsea star, because he is facing a trial in the summer following allegations he racially abused QPR defender Anton Ferdinand.
An FA statement issued on Wednesday night confirmed the dramatic development after talks between Capello and the FA officials earlier in the day.
The statement read: "The Football Association can confirm that Fabio Capello has today resigned as England Manager.
"This follows a meeting involving FA Chairman David Bernstein, FA General Secretary Alex Horne and Fabio Capello at Wembley Stadium.
"The discussions focused on The FA Board's decision to remove the England team captaincy from John Terry, and Fabio Capello's response through an Italian broadcast interview.
"In a meeting for over an hour, Fabio's resignation was accepted and he will leave the post of England Manager with immediate effect."
Redknapp, who was cleared of tax evasion on Wednesday, is the overwhelming favourite to replace Capello, but whether Tottenham would agree to release their manager with the club still harbouring title hopes, is another question entirely.
Tottenham chairman Daniel Levy has refused to comment on the possibility of Redknapp taking ove on a part-time basis until after Euro 2012.
Redknapp has been the strong favourite to succeed Capello for some time but the timing of the Italian's departure could be of benefit to Tottenham, who are currently in battling for the Premier League title.