The former Valencia supremo, already instructed with the major task of persuading skipper Steven Gerrard to remain on Merseyside after major courting from Chelsea, will now look to appoint his own staff for the season ahead.
Liverpool Chief Executive Rick Parry said: "Following talks between Rafael Benitez and Phil it has been decided that Phil will leave the Club. All the discussions were conducted in a totally amicable manner and Phil leaves with our very best wishes for the future.
"I want to thank Phil for all his hard work over the past six years as he played a major part in the successes we enjoyed during that period.
"We will obviously be sitting down now with Rafa to discuss his backroom team and will make further announcements in due course."