He had only been in charge for one season, but it was a disappointing year, with the Hornets finishing in 14th place.

"I am very disappointed by the decision of the club, especially as my work at Watford was still in its early stages," Vialli said in a statement.

"I have been co-operative towards the club and they have tried to bring the best coaching staff to assist me.

"I also wish to record my thanks to the fans for their continuous support."

Financial crisis

Despite several high-profile signings, including Ramon Vega and Stephen Hughes, the ex-Chelsea boss could not improve Watford's fortunes on the pitch.

And in the wake of ITV Digital's collapse, the club now faces major financial problems and is looking to make big cutbacks.

Plans for a new stand have been put on hold and the club has already released five players, including veteran captain Filippo Galli to ease the crisis.

But Hornets midfielder Gavin Mahon said of his manager's dismissal: "Clubs don't give their managers enough time to achieve anything - maybe they can't now.

"Vialli only had one year to bring success to Watford. But the television money going changed all that. It's sad."

"Everyone's gutted about him leaving. It's very sad news and I have no bad words to say about him.

"I understand the club has to cut back and there are a lot of clubs in the same situation because everyone is struggling to survive.

"Vialli brought me to the club and now he's gone, so where do we stand as players?"

Mass exodus

Vialli's dismissal follows the departure of other members of his coaching team.

First-team coach Ray Wilkins, fitness coach Giovanni Vaglini, club doctor Ian Beasley and masseur John Kelly left Vicarage Road earlier in the week.

With chairman Elton John also resigning last month, ending his 25-year association with the club, Watford clearly face a turbulent few weeks before their opening fixture of the new season, on 10 August, away at Leicester.