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The former Reading manager, who lasted just 33 days as Manchester City boss in 1996, has been replaced by assistant Keith Millen who has penned a three-year deal to replace the 55-year-old.
"It is with the deepest regret that I can confirm my departure from Bristol City," he said in a statement released through the League Managers' Association.
"I have made my decision after very careful consideration and I believe that it is in the best interests of both the club and me personally that we go our separate ways.
"I am retiring from football management but still feel I have a contribution to make to the game some time in the future."
Source: PA
Source: PA