Walters is in his second season as head coach with Catalans Dragons
Catalans coach Kevin Walters is to leave the struggling Super League club at the end of the season.
Walters was initially appointed as Mick Potter's replacement in May 2008 with a view to staying three seasons from 2009 until 2011 in the south of France.
But the former Australia hooker has told the players that he will leave the club at the end of the 2010 season.
"I will not be taking up the option in my contract to coach the Dragons in season 2011," said Walters.
"The Dragons are a great club with good people involved.
"My family and I have enjoyed our time here in Perpignan and I look forward to finishing off the season 2010 with some good results, similar to our campaign in 2009.
"I know that this is possible in both the Challenge Cup and the Super League with plenty of hard work and a little bit of luck."
Former Brisbane Broncos, Queensland and Australia assistant Walters took the Dragons to the Super League semi-finals last year.
And his decision comes ahead of this Sunday's Challenge Cup quarter-final at Batley, following a meeting with Dragons chairman Bernard Guasch, chief executive Christophe Jouffret and football manager Sebastien Munoz.
"I understand Kevin's decision but I'm very disappointed for him," said Guesch.
"He was a great man who work hard and was really unlucky this season.
"I hope he will get better results with the team during this second part of 2010 campaign.
"He deserves a good ending and I hope he will find a new club for a new start in his professional life."
One potential successor is Walters' predecessor in Perpignan, Mick Potter, who is yet to secure a position in Australia's NRL after announcing his intention top leave St Helens at the end of the season.
Having left the Dragons on good terms, he could be now be tempted to return to the Gilbert Brutus Stadium despite announcing his intention to return down under in October after completing his two-year contract at Knowsley Road.
Potter, who has also been linked with the vacancy at Bradford, took the Catalans to Wembley in 2007 and was Super League coach of the year in 2008 after guiding them to the play-offs for the first time.
Huddersfield are the other club with a coaching vacancy for 2011, following Nathan Brown's decision to return to Australia.