Chairman David Sheepshanks says the Blues have no replacement for Joe Royle already lined-up. Preston boss Billy Davies appears to be emerging as a strong contender to fill Royle's Portman Road role.
Sheepshanks says he and the former manager met earlier in the week and then again at Crewe railway station after Royle had returned to his house in the North: "Joe and I had a pre-planned wash-up the day before yesterday [Tuesday] then a second session yesterday. Obviously we reviewed a number of things about the season, with various issues and concerns.
"I think we had a grown-up conversation about it and we eventually agreed it would be the right time to go our separate ways.
"I have the utmost regard for him, he came in and managed club through pretty a turbulent time in the early days and leaves the club in a lot better position than he found it.
"We've got a new found stability with a lot of bright young players - there are a lot of things to look forward to going forward.
"The process is new, I haven't been in contact with any clubs or managers or anything. We will seek applicants for the position. Everyone's away on holiday so we can take a little bit of time to try and get the right appointment - we will seek all applicants."
Sheepshanks was due to announce Town's new share issue towards the end of this week but with the managerial situation coming to the fore the official confirmation will now be made next week.
While Colchester's Phil Parkinson initially appeared to be the early favourite to replace Royle, Preston's Billy Davies is understood to be highly rated by the men at the top at Town.
The 41-year-old has taken the Lilywhites to the play-offs in successive seasons and has been rumoured to want to move on from Deepdale, although he may already have his sights on a Premiership job. His Preston side, including a number of players brought through from the lower leagues like David Nugent, took the Blues apart last August, leaving Portman Road with a 4-0 victory.
Davies, previously assistant to Craig Brown at PNE and an ex-Motherwell boss, has a rolling contract with the Lancashire club and the Blues would have to pay compensation in the region of ÂŁ200,000 if they wanted to bring him to Portman Road.
As a player, Davies was with Rangers, Swedish club Elfsborg, St Mirren, Leicester, Dunfermline and Motherwell.
Skipper Jim Magilton has confirmed that he will not be applying for the position, while Terry Butcher is still in Australia continuing talks with Sydney FC. The A-League club hope the former Town and England skipper will make up his mind whether or not to become their manager by Monday.
The Blues are keen to have the new man in place before pre-season training starts on June 26th.
Elsewhere, another former Town captain Ian Atkins has been appointed Torquay's manager for next season after leading them to an incredible late season escape from relegation to the Conference.