"After considerable thought and discussion the board have decided to part company with the manager and Gerard has accepted it with typical good grace," he said.
After the treble season of 2000/01 Houllier has struggled to take the club to a higher level over the last two seasons and has been criticised for negative tactics and poor signings.
"I arrived here six years ago as a Liverpool supporter and I leave as an even bigger supporter," he said. "I may have left Liverpool but Liverpool will not leave me,
"I will return to watch the team as a fan."