The Post Office chief has been shown the door amid mounting pressure over the Horizon IT debacle that ruined the lives of hundreds of innocent sub-postmasters.
The organisation confirmed that Henry Staunton had been given the boot by Business Secretary Kemi Badenoch.
She said the company was “rightfully” under the microscope as the public outrage over the scandal rages on.
“I felt there was a need for a fresh start, and we have parted ways with mutual consent,” she said.
A temporary replacement is expected to be named soon.
Mr Staunton had been at the helm of the state-owned company since December 2022.
As part of the role, advertised with a hefty salary of up to £150,000, he had been tasked with steering the board of directors and repairing the damage of the Horizon dispute.
Before that, he had worked on the board of various companies ranging from ITV to WH Smith.
A Post Office spokesperson said: “On Saturday afternoon, the Post Office was informed that the business and trade secretary had asked Henry Staunton to step down as chairman of the Post Office.
“We have been advised by the government that they will appoint an interim chairman shortly.”
The government has not responded to requests from the BBC to provide an explanation for Mr Staunton’s departure.
It said a recruitment process will be launched in due course.
Sky News, which broke the story, said an insider claimed there had been several sources of friction between the Post Office boss and the government in recent months.
But sources said Mr Staunton’s exit was not directly linked to the Post Office scandal.
A spat over the best candidate for the appointment of a new senior independent director was reportedly among the issues sparking tensions.
It comes as the Post Office is grappling with the aftermath of the Horizon scandal, which has been dubbed the biggest miscarriage of justice in UK history.
More than 700 sub-postmasters and sub-postmistresses were prosecuted between 1999 and 2015 after faulty accounting software Horizon made it seem as though money was vanishing from their shops.
Many of those affected were left destitute.