A statement on behalf of the pair said they stepped down as directors of Newcastle United plc and Newcastle Football company. "They ... arrived at this decision after ... careful consideration to ensure that the allegations made against them do not further affect Newcastle United and enable them to concentrate their energies in restoring their reputations."
Earlier yesterday the Football Association said the allegations had strengthened its intention to introduce a code of conduct for clubs. But it has been advised against bringing disciplinary action while the club's position remains unclear.
A statement is due from Newcastle United Plc today when it announces its half-yearly results to the City, and the club will find it impossible to dodge the question of its management crisis. Stockmarket rules meant no statement could be issued before the figures were released.
Mr Shepherd and Mr Hall were quoted by the News of the World calling Newcastle women "dogs" and mocking players. The paper also said they indulged in sex and drinking sessions around the world. Three non-executive directors, Sir Terence Harrison, John Mayo and Denis Cassidy, have made clear their concern over the claims and were expected to raise them at a crunch meeting of the board yesterday.
The directors, who faced calls of "Sack the board" from fans as they entered St James' Park yesterday, were locked in discussions nearly all day.
Graham Kelly, the Football Association's chief executive, said the allegations surrounding Mr Shepherd and Mr Hall were "deeply damaging".
"The anger of supporters is utterly understandable. They have deserved better, much better," Mr Kelly said. In response to criticisms that the Football Association was doing nothing, Mr Kelly said it had been advised that disciplinary action was not the way forward at this stage. "Our legal advice has been clear, we should await a statement then action by Newcastle United."
But he said the FA was giving urgent consideration to proposals from Sir John Smith, former deputy commissioner of the Metropolitan Police, in a report for the association. "His recent report called for a code of conduct by which all those active in the game can be judged."