Henry Staunton has been in the job for just a year but will leave following tensions with ministers. His departure follows a conversation with Kemi Badenoch, the business and trade secretary, on Saturday.
Ms Badenoch said she “felt there was a need for new leadership” at the Post Office as it was announced outgoing chairman Mr Staunton was stepping down.
The Business Secretary said: “The Post Office is rightfully under a heightened level of scrutiny at this time. With that in mind, I felt there was a need for new leadership, and we have parted ways with mutual consent.”
The state-owned company has come under intense scrutiny in recent weeks following a public outcry over what Rishi Sunak described as “one of the greatest miscarriages of justice in our nation’s history”.
Hundreds of subpostmasters were prosecuted by the Post Office for theft and false accounting because of a faulty computer system made by Fujitsu, Horizon.
The prime minister announced he would bring forward legislation to exonerate them after an ITV drama, Mr Bates vs the Post Office, highlighted the scandal.
It has since emerged that the government estimates the total compensation bill paid to subpostmasters will top £1bn.
One source of tension between Mr Staunton and ministers is reported to be the bonus given to chief executive Nick Read and linked to the Post Office’s cooperation with the Horizon inquiry.
A Department for Business and Trade spokesperson told Sky News: “The secretary of state today had a phone call with Henry Staunton, the chair of Post Office Limited (POL).
“Following this call, we can confirm that he has been dismissed as POL chair. An interim will be appointed shortly.
“It is important the Post Office continues the essential work to implement the necessary operational and cultural changes needed within the business.”
Insiders told Sky Mr Staunton’s exit was not directly related to the Horizon scandal.
Campaigning Labour MP Kevan Jones said: “The Government needs to explain why it has sacked the Post Office chair. This should be the start of a number of changes at the top of the Post Office. The government will need to ask whether the board and senior management are fit to handle the scale of this scandal.”
An interim chair will be appointed shortly and then the process to find a permanent replacement will begin.
Tory peer Lord Arbuthnot, who also sought justice for the subpostmasters, ruled himself out of running for the role as new chair.He said: “There is a need for dramatic cultural and governance change which can be brought in only by someone with experience of doing that sort of thing.”
Mr Staunton was appointed as chair by the former business secretary Kwasi Kwarteng in September 2022.
He had previously been chair of WH Smith, the retail chain.
The official announcement unveiling his appointment said he would “lead the board of directors as the business looks to the future as well as working to right the past wrongs of the Horizon IT dispute”.