كتب : Hatem Maher
"The Federation considers the contractual relationship with Roberto Donadoni to have run out at its natural expiry date," the FIGC said in a statement on their website.
Donadoni held a meeting with FIGC president Giancarlo Abete, during which it was decided that the former Livorno boss is no longer needed at Italy's helm.
The 44-year-old failed to guide Italy beyond EURO 2008 quarter-finals.
The Azzurri were knocked out of the tournament after a penalty shoot-out defeat to Spain.
Lippi Returns
Few hours after announcing that Donadoni has been axed as Italy boss, the FIGC said that Marcello Lippi would fill the managerial seat.
Lippi will be officially unveiled at a news conference on Tuesday.
The highly-respected tactician steered Italy to World Cup glory in 2006. He handed in his resignation right after the tournament's end.
Lippi has been out of work since Italy's World Cup triumph, despite receiving numerous offers from plenty of clubs.