KENNY DALGLISH has been sacked as Liverpool FC manager after 16 months back in the Anfield hot-seat.

The Kop legend and his assistant Steve Clarke have had their contracts terminated today by owners Fenway Sports Group.

The decision by principal owner John W Henry and chairman Tom Werner brings to an end days of intense speculation about Dalglish's future.

Dalglish, who still had two years remaining on his contract, had been left in limbo after flying to Boston to hold face to face talks with the owners on Monday.

He delivered his end of season report and set out his vision for taking the club forward but received no reassurances about his position before flying home.

FSG have now broken their silence by deciding to dispense with his services and sacking him is certain to divide the club's supporters.

Dalglish led Liverpool to their first trophy for six years when they lifted the Carling Cup at Wembley back in February and they also reached the FA Cup final where they lost to Chelsea.

However, success in the cups ultimately counted for nothing with Dalglish paying the price for Liverpool's poor Premier League campaign which saw them slip to eighth place with just 52 points.

That represented their worst finish for 18 years and their lowest points tally since 1953/54.

Henry had said last summer that it would be “a major disappointment” if Liverpool didn't secure Champions League qualification and they finished 17 points adrift of fourth place.

The owners had expected better having invested £113million on signings since handing Dalglish the job in January 2011.

However, the likes of Stewart Downing, Jordan Henderson, Charlie Adam and Andy Carroll failed to live up to their expensive price tags.

Just a month ago, following the sacking of director of football Damien Comolli, the owners had given Dalglish a vote of confidence.

When asked if the Frenchman's departure would have any impact on Dalglish's position, chairman Werner said: “Absolutely not.

We've got great confidence in Kenny.

We feel the team is going to make strides in the future and he enjoys our full support.”

But that support no longer exists and they are now searching for a replacement.

It's a sad end to Dalglish's second spell in the Anfield hot-seat which began on January 8 2011.

Already at the club as an ambassador, he was appointed as caretaker boss following Roy Hodgson's dismal six-month reign.

The calls from the Kop for Dalglish to replace Hodgson had been deafening and Henry gave the fans what they wanted.

It was a dream return for Dalglish who admitted he had “unfinished business” at Anfield after walking away from the job due to health reasons in 1991 after a six-year spell in charge which yielded three league titles and two FA Cups.

Liverpool were slumped in 12th place in the Premier League and just four points above the drop zone but Dalglish, widely regarded as the greatest player in the club's history, masterminded a remarkable revival.

The club's pass and move philosophy was restored, along with a unity, spirit and a sense of togetherness which had been lacking.

Dalglish led Liverpool to a respectable sixth-placed finish and was rewarded last May with a permanent three-year contract.

Last summer he oversaw a major rebuilding job as seven new players were signed and no fewer than 18 departed.

That £56million spending spree raised expectations and contributed to a feelgood factor going into this season.

Optimism was soon dented by inconsistency in the league and Liverpool's form dipped alarmingly in the second half of the season when they won just five of their 19 remaining league matches.

Dalglish argued the Reds' performances had deserved better and was confident of overseeing a big improvement next season.

However, that opportunity has been ruthlessly taken away from him as FSG plan for the future without him.