"The Board of Directors and all at Manchester City would like to thank Sven for his efforts and contributions throughout the season and we wish him all the best for the future," Manchester City chief executive Alistair Mackintosh said in a statement.

Eriksson's future with Man City has been in doubt for a few weeks, as the club's Thai owner Thaksin Shinawatra was said to be unhappy with the team's performance in the second half of the season.

The former England coach spent less than a year on the job and helped Manchester City finish the season in 9th place and clinch a UEFA Cup spot, thanks to their disciplinary record.

Both the club and the 60-year-old manager insisted that there is no bad blood between them.

"Sven remains a friend of the club," Mackintosh added.

Eriksson, who is tipped to take over the Mexican national team, was also diplomatic.

"I have enjoyed my time at Manchester City very much indeed and in particular, I would like to thank the fans, players and staff for their amazing support over the season," Eriksson told the club's website.

"I wish the club - and everyone associated with it - much success in the coming years."

Mark Hughes is favorite to replace Eriksson after Blackburn Rovers gave him the green light to talk to City officials.