The English FA issued a statement after an emergency board meeting on Thursday morning saying that the England manager’s contract has been terminated.

England went inches close from reaching the Euro 2008 as they only needed a draw against Croatia, on Wednesday, but instead they had a shock 3-2 defeat at Wembley to miss their first major tournament since the World Cup 1994.

McClaren had his contract running until 2010 and he refused to step down after the defeat. He was in charge for only 16 months, making him the most short-lived England coach.

"I would like to thank Steve for the work he has done since taking on the position last summer,"FA Chairman Geoff Thompson said.

"His commitment to the job could not be questioned and I wish him the best for the future."

The FA statement indicated that it will launch an investigation regarding the slip up.

"Of course we have no divine right to play in major tournaments, but it is quite right that qualification is expected," added Thompson.

The search for a new head coach to take over the team will begin immediately according to the FA, but there has been no deadline set for announcing the new coach.

Chelsea's former manager Jose Mourinho has been tipped as a front runner for the position, while veteran Italian Fabio Capello openly announced his interest in coaching England.