City announced Lee's departure at a press conference this afternoon and named a director David Bernstein to succeed him.
In a statement, the outgoing chairman claimed his family, personal and business life had been severely disrupted in recent weeks.
He will remain as a shareholder, millionaire businessman John Wardle of JD Sports has joined the board and former player Dennis Tueart will act as a link man between the directors and the manager.
The club's official website said: "The whole unit are now looking forward to putting a season of unrest over Boardroom politics behind them, as they all concentrate on the most important eight games in the history of Manchester City FC."
Francis Lee was hailed as a saviour by long-suffering City fans when he won control of the club from Peter Swales, the chairman who presided over the club's decline in the late seventies, eighties and early nineties.
But Lee failed to bring back the glory days he had known as a player at the club in the Sixties, when City pipped their great rivals Manchester United to the championship in 1968.
Fans blamed him for appointing unsuccessful managers and the sacking of Frank Clark and appointment of another old City favourite in Joe Royle last month, the sixth manager in eighteen months, failed to end the barracking he was suffering.
City remain in the relegation zone in the First Division and very much in the shadow of Premiership-title chasing Manchester United.
Knives out at Maine Road
(18 Feb 98 | Sport)
The fall and fall of Manchester City
(18 Feb 98 | Sport)
City statement on Lee
City's desperate league position
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