Paulo Sousa had only been in charge of Swansea City for a year
Swansea City manager Paulo Sousa has left his position by mutual consent and is set to take up the vacant post at Leicester City, where he is in talks.
A club statement says he was granted his request to speak to Leicester.
It is understood compensation has been agreed with Leicester for Sousa, while it was felt that the speculation on his future was harming Swansea.
Sousa took Swansea to the brink of the Championship play-offs in his first and only season in charge.
The former Portugal international, who won the Champions League twice as a player, had two years to run on his contract at the Liberty Stadium.
But with Foxes boss Nigel Pearson leaving for Championship rivals Hull City last week, chairman Milan Mandaric made his move for personal friend Sousa.
"Swansea City would like to thank Paulo for his services over the last year and wish him well for the future," said a club statement, that also promised further announcements regarding the search for a new manager.
In his one year with Swansea, Sousa guided the Welsh club to within a point of the Championship play-offs, ultimately missing out after a run of three wins in the final 13 games.
During his tenure, the Swans had one of the best defences in the division conceding 37 goals and setting a new club record 24 clean sheets as they reached their highest position for 27 years - seventh.
However, they scored the fewest goals managing just 40 and failed to score in 18 games.
Sousa's relationship with Swans chairman Huw Jenkins appeared to become more strained as the season went on with the club refusing to break their strict budget.
It led to an outburst in April in which Sousa claimed a seven-match winless run the previous month could have been avoided had the squad been strengthened.
Jenkins played down the outburst at the time as "passion and emotion".
But he again had to quash reports of a rift at the end of the season following the failure to reach the play-offs saying a few emotional comments by Sousa had been "taken out of context".
Swansea's players are due back for their first pre-season training session on Monday after reporting back for health and fitness checks on Friday.
Once again it shows the lack of loyalty in the game at the moment
Ex-Swansea and Wales striker Ian Walsh on Sousa
Former Swansea and Wales striker Ian Walsh offered a highly critical assessment of Sousa's period in charge.
"Once again it shows the lack of loyalty in the game at the moment," Walsh told BBC Sport Wales.
"Paulo Sousa was out of QPR and looking for a way back in. Swansea kindly gave him that opportunity and - in my opinion - he's let them down.
"To move so quickly after building a very strong team at the Liberty Stadium is really disappointing.
"Frustrating or not, he must have known the financial situation when he took the job - it's a tight budget and he had to work with that.
"Sousa always wanted to get to the highest level as quickly as possible and that showed throughout the season. I'm really disappointed with him.
"Sometimes in football managers are kicked out too soon, but on this occasion it's the manager that's walked - that shows what football is all about at this time.
"[I would rate his Swansea reign as] five out of 10, could do better.
"Given time and a few more players he could have developed. I don't think he endeared himself to all the players.
"It's going to be a tough season for Swansea. There are a lot of good sides in the Championship but hopefully they can start very well, a good, young manager could be a breath of fresh air and really boost them.
"I'd like to see someone like Gary Speed come in. He's learnt his trade at Sheffield United, the players would respect him from day one and he would be a great option."
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