The Australian Rugby Union will today announce Jones has coached his last game, with his autocratic style a major factor in the decision to sack him.
Jones had been under intense pressure to retain his job after the Wallabies lost eight of their past nine Tests.
He was hoping to present his case to the ARU board next week, but overseas sources have told The Australian that the union has already decided to release him from his contract, which runs through to the 2007 World Cup in France.
ARU chief executive Gary Flowers was involved in a series of late-night meetings at the governing body's North Sydney headquarters.
Jones has agreed to a settlement for the remainder of his contract. He is almost certain to continue his international career coaching the Japanese national team.
NSW Waratahs' coach Ewen McKenzie is regarded as the front-runner to replace Jones, although Auckland Blues coach David Nucifora and former Queensland Reds coach John Connolly have also expressed interest in the job.
Earlier it had been rumoured that Jones had approached Western Force and former All Blacks' coach John Mitchell to assist him with the Wallabies, perhaps to guide the pack which was outplayed in the set-piece on the European tour.
But Force officials denied there had been any contact between Jones and Mitchell, who is contracted to the Super 14 expansion team for the next three years.
Jones, who succeeded 1999 World Cup winning coach Rod Macqueen in mid-2001, had a 33-23-1 win-loss-draw record at the helm.
But there were concerns about the Wallabies' poor record against fellow top five opposition, winning only 14 of 36 Tests against major powers England, France, New Zealand and South Africa.
Australia's away record was especially bad against the leading teams, winning just two of 18 Tests.
The highlight of Jones' career was plotting an upset win against New Zealand in a semi-final of the 2003 World Cup in Sydney.
The Wallabies lost to England 20-17 in extra-time in the final.
Jones's departure is almost certain to draw the curtain on the career of Wallabies' captain George Gregan, who is one Test short of breaking former England prop Jason Leonard's world record of 118 caps.
As much as the Wallabies' appalling win-loss record this season Jones's style was the reason for his downfall.
ARU board members have been dismayed by the constant turnover of assistant coaches who have sighted his autocratic style as stiffling and the main reason for their departures.
Former Australia coach Alan Jones yesterday launched another stinging attack on Eddie Jones, saying the players are terrified of speaking out against him and it is wrong to assume he has the support of the team.
While Eddie Jones has so far enjoyed nothing but positive public comment from those underneath him, Alan Jones believes it's an illusion.
"Eddie Jones is the paymaster," Alan Jones said yesterday.
"The team are terrified that if he stays on, and if they dare criticise him now, their income is finished. So players are in an impossible position.
"Players are frightened to speak out against him. Staff have walked out."
Wallabies players were quick to jump to the defence of Jones on their return to Australia on Monday, fullback Chris Latham and winger Drew Mitchell particularly staunch in their support of their embattled coach.
But according to Alan Jones it's too little too late after Eddie Jones said he wasn't concerned about ARU's performance review.
"I think that Eddie Jones' comment that he's unconcerned is a manifestation of the arrogance that has dominated his role as head coach," said Alan Jones who was sacked after an unsuccessful tour to Argentina in 1987.
"If Eddie Jones is a half responsible national coach, he should be unbelievably concerned about the damage that has been done to Australian Rugby.
"He says he has taken responsibility for the results. Well, a person with any honour would resign.
"I don't know why a head coach is needed if we have to have a forwards coach, a backs coach, a kicking coach, a skills coach, a technical coach," Alan Jones said.
"What on earth does this man do for the money he is paid?
"We have outstanding players. We are smack bang in the middle of a leadership that can't adjust to the modern demands; a leadership that can't co-ordinate the team to meet the challenge offered on the other side."
Additional reporting: AAP
The Australian
