Liverpool have revealed Pako Ayestaran has stepped down from his position as assistant manager to Rafael Benitez.
Ayestaran, who has been linked with a return to Spain, remains contracted to the Reds until 30 June 2008, meaning he cannot take up another job until then.
Chief executive Rick Parry told the club website: "After talks between Pako and Rafael, it would be in everyone's best interests if Pako leaves his post.
"Pako, however, will remain under contract to us until next summer."
Parry added: "The club want to thank Pako for his hard work and contribution to our success over the past three years."
Ayestaran worked together with Benitez at Tenerife and Valencia and they moved to Liverpool together in June 2004.
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