Massimo Vidulich, the Torino president, confirmed Souness' departure yesterday morning before announcing the appointment of the former Brescia manager Edoardo Reja.
Souness, who resigned as manager of Southampton in May, said he remained committed to the Italian club and had taken on a different role. "When I accepted the position at Torino, I realised there was a very difficult job to be done," he said.
"The club had brought in 15 new players before I arrived. But, despite this, I was confident that, given sufficient time, I would achieve the sort of success that this great club and its supporters deserve. The board has now decided to pursue a new course. I remain committed to the club and I have, therefore, agreed with the board that I will now take a wider role in strategic development of Torino."
The tenuous nature of Souness' new role has fuelled reports that he could return to Ibrox and link up with his former Rangers assistant, Walter Smith, although this was denied yesterday by the Rangers chairman, David Murray. Smith replaced Souness in 1991, when the former Scotland captain moved to Liverpool as manager.