He will step down at the end of April when he will be replaced as chairman by Brian Moffat, currently British Steel's chief executive.
Sir Alistair, 64 next month, took over the chairmanship on a part-time basis from Sir Robert Scholey only last August. He will stay on at Wellcome, the drugs company where he is also chairman.
The decision to allow Mr Moffat, 54, to combine the roles goes against the recommendations of the Cadbury report on corporate governance. This called for the jobs of chairman and chief executive to be split to prevent too much power being vested in the hands of one executive and to protect shareholder interests.
Sir Nicholas Goodison, chairman of the TSB bank and a non-executive director of British Steel, will be appointed deputy chairman with formal responsibility for ensuring the company complies with the Cadbury code. 'We believe we will still follow best corporate practice and that the board will still have adequate checks and balances,' a spokesman said.
Although Sir Alistair has not been well for some time, his decision to relinquish the job at British Steel, where he put in about two days a week, came as a surprise. A colleague said: 'I think he has probably just taken on too much recently and the signs are beginning to show.'
The strategy had been for Mr Moffat to succeed Sir Alistair after about three years whereupon the chief executive's post would be filled by one of three executive directors appointed to the board last year.
Although industry sources indicated that British Steel would probably separate the roles of chairman and chief executive eventually, the board is not thought to be in any hurry.
Yesterday's changes will leave British Steel with a board of 12, of whom six are non-executives. Mr Moffat has been chief executive for less than two years. He was promoted from finance director in July 1991 after the unexpected resignation of Martin Llowarch, Sir Robert's heir apparent.
The three contenders to take on the chief executive's job eventually are Harold Homer, managing director of general steels, John McDowall, managing director of strip products, or Tony Peddar, managing director, commercial and distribution.Reuse content