Sven-Goran Eriksson will stand down as England coach following this summer’s World Cup finals.
Eriksson, 57, met Football Association officials on Monday and will leave the job after six years in charge.
He said: “I am happy we have reached this agreement and can now continue our preparations for the World Cup.
“It is important to stress how committed I am to success this summer. Let’s go and win the World Cup.”
A golden handshakes deal has been agreed on the Swede’s £4m-a-year contract, which was due to run out until 2008.
In his statement the England coach said: “I know that I have the full support of the players and the FA.
“I care passionately about this job and I want everyone to know that.
“I have always enjoyed the incredible support of the fans and I know how important they will be to us in Germany.”
Eriksson has come under increasing pressure after making damaging revelations to an undercover reporter from the News of the World.
The latest reports, published on Sunday, quoted him as saying that some unnamed managers “put money in their pocket” when involved in transfer deals.
FA chief executive Brian Barwick said: “This is for the benefit of everyone connected with English football, especially the fans.
“There has been so much speculation surrounding this matter in recent weeks and months, it was important to resolve it now. This is the right outcome and I would like to thank Sven and his advisors for their tremendous co-operation.
“As I have said before, our main objective is giving Sven and the England team the best chance of achieving success at the World Cup. Sven is definitely the man to lead us in Germany.
“Now is the time for everyone to get behind the team as we prepare for a tournament that presents us with a genuine chance of success.”
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