The club issued a statement saying Benitez was leaving "by mutual consent." "It is very sad for me to announce that I will no longer be manager of Liverpool FC," the 50-year-old Benitez said in a statement released by the club. "I would like to thank all of the staff and players for their efforts." He said he would always remember the support he received from the Liverpool fans.
"I'll always keep in my heart the good times I've had here, the strong and loyal support of the fans in the tough times and the love from Liverpool. I have no words to thank you enough for all these years and I am very proud to say that I was your manager.
"Thank you so much once more and always remember: You'll never walk alone." Liverpool chairman Martin Broughton said that a poor team performance in the season just ended had meant Benitez had to go.
"Rafa will forever be part of Liverpool folklore after bringing home the Champions League following the epic final in Istanbul but after a disappointing season, both parties felt a fresh start would be best for all concerned." The announcement came after the Spaniard had talks with the club and his agent to discuss a compensation deal worth 3 million pounds ($4.4 million) for him to depart with immediate effect.
Benitez moved to Liverpool in 2004 after leading Valencia to two Spanish league titles and the UEFA Cup, and he had an amazing start at Anfield.
He led the team to a Champions League final triumph, the team beating AC Milan on penalties after being 3-0 down at halftime. The club won the FA Cup the following season and was runner-up to Milan in the 2007 Champions League final.
But Benitez was unable to guide the team to the league title. It last won that trophy in 1990 and, in the past few seasons, Manchester United tied its record 18 championship triumphs.
His departure means that he is looking for a new job and Liverpool is after a replacement.
After losing Mourinho to Real Madrid, newly crowned Champions League winner Inter Milan is looking for a coach.
With Fabio Capello announcing he is staying on as England manager until 2012, Benitez appears to be Inter's leading target.
Among the names mentioned as a possible replacement for Benitez at Liverpool were Guus Hiddink, who is due to start work as coach of Turkey's national team in August, Martin Jol of Ajax and Fulham's Roy Hodgson, who took the modest west London club to the final of the Europa League this past season.
Avram Grant was another name being linked but the Israeli ruled himself out Thursday when he agreed a four-year deal to take over at West Ham.
Benitez's future has been the subject of much speculation in the past two seasons during a time of turmoil behind the scenes at Liverpool.
American co-owners Tom Hicks and George Gillett Jr., who bought Liverpool three years ago, have put the club up for sale after a public fallout over the running of the club.
Liverpool is now heavily in debt and, for the first time since the 2003-04 season, will not be playing in the Champions League next term.
The lack of success this past season has also led to strong speculation that star players such as Steven Gerrard, Javier Mascherano and Fernando Torres could move to other clubs.
