The news came on the first anniversary of City’s dramatic final-day Premier League title success.

Malaga coach Manuel Pellegrini is the favourite to succeed him, although assistant manager Brian Kidd will take charge for the final two games of the season – against Reading and Norwich – and next week’s United States tour.

The statement read: “It is with regret that Manchester City Football Club announces that Roberto Mancini has been relieved of his duties as Manchester City manager.

“This has been a difficult decision for the owner, chairman and board to make and it is the outcome of a planned end-of-season review process that has been brought forward in light of recent speculation and out of respect for Roberto and his extensive contributions to the football club.

“Despite everyone’s best efforts, the club has failed to achieve any of its stated targets this year, with the exception of qualification for next season’s UEFA Champions League.

“This, combined with an identified need to develop a holistic approach to all aspects of football at the club, has meant that the decision has been taken to find a new manager for the 2013-14 season and beyond.”

Mancini’s position looked impregnable when he was rewarded for winning the title with a five-year contract last summer.

But City’s failure to build on that achievement has cost the 48-year-old, with their title defence being an underwhelming one and their Champions League campaign ending prematurely at the group stage.

They failed to secure the consolation of a second FA Cup win in three seasons as Wigan shocked them in Saturday’s final, although it seems Mancini’s fate had already been decided before then.

Rumours on the eve and the morning of the match suggested Mancini’s exit was imminent and overshadowed the build-up to the game.

Mancini later blamed club officials for failing to quash the rumours but no denials were forthcoming.

Chairman Khaldoon Al Mubarak said: “Roberto’s record speaks for itself and he has the respect and gratitude of Sheikh Mansour, myself and the board for all of his hard work and commitment over the last three and a half years.

“He has clearly also secured the love and respect of our fans.

“He has done as he promised and delivered silverware and success, breaking the club’s 35-year trophy drought and securing the title in 2012.

“I would like to personally and publicly thank him for his dedication to the progress that he has overseen and for his support and continued friendship.”

Attention will now turn to Pellegrini, who said over the weekend he will leave Malaga at the end of the season but has denied having an agreement in place with City.

Mancini’s name has been removed from the list of coaching staff on the club’s website but other members of his backroom team, including number two David Platt and Attilio Lombardo, remained in place on Monday night.

But it is Kidd who will attempt to lift the team at Reading tonight as they chase the point that will secure second place.