Kenny Dalglish was today sacked as Liverpool manager after one of the club's most disappointing seasons.

Although they won the Carling League Cup and lost out only to Chelsea in the FA Cup final, the Reds finished below city rivals Everton in the league and failed to score in many games.

The announcement comes just 24 hours after the Scot returned from a meeting with principal owner John Henry and chairman Tom Werner in the United States.

Dalglish paid the price for failing to close the gap on the top four with the Reds finishing eighth despite significant investment in playing staff in his 15 months in charge.

"Fenway Sports Group and Liverpool Football Club announce that Kenny Dalglish is to leave his post today as manager after having his contract terminated," said a joint statement.

"After a careful and deliberative review of the season the club came to the decision that a change was appropriate. It is not a decision that was reached lightly or hastily. The search for a new manager will begin immediately."

Werner said they had made a tough decision to remove a man who is held in such high esteem at Anfield following his exploits as a player and manager in his previous spell in charge.

He acknowledged the effect the 61-year-old had had in putting things on a more even keel after a disastrous six months under Roy Hodgson but felt a change was required.

"Kenny came into the club as manager at our request at a time when Liverpool Football Club really needed him," he said. "He didn't ask to be manager; he was asked to assume the role. He did so because he knew the club needed him.

"He did more than anyone else to stabilise Liverpool over the past year and a half and to get us once again looking forward. We owe him a great debt of gratitude.

"However, results in the Premier League have been disappointing and we believe to build on the progress that has already been made, we need to make a change.

"We are committed to delivering success for our supporters and our ambition remains resolute to return this great club to the elite of England and Europe, where it belongs."

Henry was also fulsome in his praise for the Scot. "Kenny will always be more than a championship-winning manager, more than a championship-winning star player," he said.

"He is in many ways the heart and soul of the club. He personifies everything that is good about Liverpool Football Club. He has always put the club and its supporters first. Kenny will always be a part of the family at Anfield.

"Our job now is to identify and recruit the right person to take this club forward and build on the strong foundations put in place during the last 18 months."

Despite winning the Carling Cup and reaching the final of the FA Cup the Reds' league results were disappointing. A 14th defeat of the season at Swansea on the final day of the season condemned the club to their worst league finish for 18 years and their lowest points tally (52) since 1953/54.

Prior to the start of the season Henry had suggested that Champions League qualification was the minimum requirement.

There had been progress made under Dalglish, who initially took temporary charge in January 2011 with the club dangerously close to the foot of the table after Hodgson failed badly.

The Scot was given a three-year contract a year ago but an inability to sufficiently close the gap to the top four despite a significant outlay on transfers appears to have persuaded Fenway Sports Group a change was required.

From the moment he was appointed in temporary charge Dalglish insisted he would do whatever was necessary for the benefit of Liverpool. On departing the club which has been a huge part of his life over the last four decades he said: "It has been an honour and a privilege to have had the chance to come back to Liverpool Football Club as manager.

"I greatly appreciate the work that Steve (Clarke), Kevin (Keen), the players and all of the staff put in during my time and feel proud that we delivered the club's first trophy in six years, winning the Carling Cup, and came close to a second trophy in the FA Cup final.

"Of course I am disappointed with results in the league but I would not have swapped the Carling Cup win for anything as I know how much it meant to our fans and the club to be back winning trophies.

"Whilst I am obviously disappointed to be leaving the football club, I can say that the matter has been handled by the owners and all concerned in an honourable, respectful and dignified way and reflects on the quality of the people involved and their continued desire to move the football club forward in the same way as when they arrived here.

"I would like to thank all of the staff at the club for their effort and loyalty. I said when first approached about coming back as manager that I would always be of help if I can at any time and that offer remains the same.

"Finally, I want to put on record my heartfelt gratitude to Liverpool's fans, who have always given me and the club their unwavering support. Without them neither the club nor I would have achieved anything."

Dalglish becomes the second Scottish manager of a Premier League side to be forced out within 24 hours, following Alex McLeish's departure from Aston Villa yesterday.

DALGLISH FACTFILE - THE LIVERPOOL YEARS
1977: August 10 - Joins Liverpool from Celtic in a British record £440,000 deal.
August 13 - Makes Liverpool debut in Charity Shield encounter with Manchester United.
August 20 - Scores first Liverpool goal after just seven minutes of league debut against Middlesbrough at Ayresome Park.
August 23 - Nets on Anfield debut as the Reds beat Newcastle 2-0.
1978: Tops the club's goalscoring chart at the end of first full season with Liverpool, his one-in-two ratio bringing 31 goals in 62 appearances.
May 10 - Scores the winning goal in the European Cup final against FC Brugge at Wembley.
1979: Awarded the Football Writers' Player of the Year award as Liverpool wrap up the First Division championship.
1980: Wins second league title with Liverpool.
1981: Liverpool win the League Cup, but the big prize comes as the Reds clinch the third European Cup of the Bob Paisley era.
1982: Liverpool claim another league title and a second successive League Cup win.
1983: A third League Cup triumph is capped by securing back-to-back league titles. Dalglish's contribution is recognised as he wins both main player of the year awards.
1984: Now playing under Joe Fagan, Dalglish is again inspirational as Liverpool clinch a famous treble, lifting the European Cup, league title and League Cup.
1985: May 29 - Hours before the ill-fated European Cup final against Juventus at the Heysel Stadium in Brussels, Fagan announced he would retire at the end of the season, leaving Dalglish to step up to a player/manager role.
1986: With English clubs banned from Europe in the wake of the Heysel disaster, Dalglish secured a league and FA Cup double, scoring the goal which won the First Division crown.
1987: Liverpool finish the 1986-87 season without any of the major domestic prizes.
1988: Dalglish signs Peter Beardsley, John Barnes and John Aldridge and his new-look side win a second title under his tenure as player-manager.
1989: April 15 - Dalglish endures his darkest hour as Liverpool manager when 96 fans of the club die in a crush at Hillsborough at FA Cup semi-final against Nottingham Forest.
May 20 - Just five weeks after the events of Hillsborough, Dalglish leads Liverpool to an emotional 3-2 win over Everton in the FA Cup final at Wembley.
1990: May 1 - Makes his final appearance for the club at the age of 38, coming on as a second-half substitute in Liverpool's last home game of the season against Derby, by which time the Reds were league champions for the third time under Dalglish and for the 18th time in total. He retired with a record of 172 goals in 515 first-team games for the club.
1991: February 22 - Dalglish ends his long association with Liverpool as he stands down as manager on health grounds.
2009: July 3 - Dalglish is appointed to a senior role at the Liverpool academy and is also to act as a club ambassador.
2010: June - Asked to help find Rafael Benitez's successor. After completing his search puts himself forward for consideration but is rejected by the board. Roy Hodgson is eventually appointed.
2011: January 8 - Following Hodgson's departure, Dalglish takes charge of Liverpool until the end of the season.
May 12 - Signs a three-year deal to remain at Anfield.
December 21: Incurs widespread criticism for joining players by wearing a T-shirt in a show of support for Luis Suarez, accused of racially abusing Patrice Evra.
2012: February 12: Publicly apologises for "conduct not befitting of a Liverpool manager" during a television interview after defeat at Manchester United prior to which Suarez refused to shake the hand of Evra.
February 26 - Ends Liverpool's six-year trophy drought with a Carling Cup victory over Cardiff at Wembley.
April 12: Liverpool chairman Tom Werner states owners Fenway Sports Group have "great confidence in Kenny and he enjoys our full support".
May 5 - Liverpool lose FA Cup final 2-1 to Chelsea.
May 13 - A defeat at Swansea condemns Liverpool to their lowest league finish (eighth) for 18 years and their lowest points tally (52) since 1953/54. Flies out to Boston for meeting with principal owner John Henry and Werner.
May 16: Contract terminated by the club.