Confirming the departure, City's chairman, Francis Lee, said: "Alan resigned this evening. It's a sad day for us all. It was just one of those things - we're all hacked off. You had better speak to him to get the full reasons." Ball was not available for comment.
His resignation marks the second occasion in three years that the Maine Road club has lost a manager before the end of August. It came three years to the day after Peter Reid was dismissed as manager.
His departure folows a moderate opening to the new season in the Nationwide League First Division, after relegation from the Premiership last May. City, with only nine wins under Ball last season, kicked off this term with a 1-0 win over Ipswich, but have lost their other two games, 1-0 at Bolton and 2-1 at Stoke.
Ball's year-long reign ended following a turbulent weekend when he was jeered by both Manchester City and Stoke City fans during the disappointing defeat. Rumours of unrest in the dressing-room have also played a leading role in Ball's departure.
The former England World Cup winner helped his friend and City chairman, Francis Lee, by taking the decision and saving him the expensive exercise of the sack. Lee, under pressure to find extra finances to lift the club, will have the difficult task of identifying a replacement. Bruce Rioch is available but may be reluctant to return to a team in such turmoil.
Ball, 51, is the last member of England's 1966 World Cup final team to have a hands-on role in the game, although Bobby Charlton remains involved as a director of Manchester United.
His career in management has not been marked with many high points. His greatest achievement was to steer Portsmouth into the old First Division in 1987, but he did not meet with much success in his spells in charge at Southampton, Exeter City and Blackpool or Stoke.
n Mansfield's manager, Andy King, will meet his club chairman, Keith Haslam, tomorrow to discuss his future with the Third Division club following their poor start to the season. He has been relieved of his duties for the next two days pending the meeting and the reserve team manager, Steve Parkin, will take charge for tonight's match at Hartlepool.