The 35-year-old former Newcastle, Tottenham and Marseille winger, will be available for pounds 250,000. He said Wednesday's manager, David Pleat, had made it clear that he was "no longer regarded as a regular in the team."
"I want to be either playing regularly or doing a job as a player-coach or as a player-manager, so we agreed it would be best if I was made available."
Waddle has been on the bench for the last three Wednesday matches but his last start was at Aston Villa on 6 March.
Waddle's former Tottenham cohort, Glenn Hoddle, will also need a new contract at the end of next month. The Chelsea manager meets his club chairman, Ken Bates, and his boardroom colleagues tomorrow after Chelsea's Premiership trip to Sheffield Wednesday.
"It's not about my contract but about how the club is going to be run. Hopefully it's going to be positive," Hoddle said. "I need to know exactly what's going on and it has taken a hell of a long time to get this meeting to fruition."
Chelsea players have encouraged Hoddle to stay and finish the job at Stamford Bridge where Bates took the holding company, Chelsea Village, on to the Alternative Investment Market recently.
"Supporters keep saying to me, `Why haven't you signed your contract?'. But they don't understand the issues which have got to be sorted out from the top level. We need some direction.
"At the moment I'd be a fool to put pen to paper and commit other people's livelihoods as well. I saw what happened at Tottenham when they first went public and it was frightening. I don't think it's all rosy and there are a lot of things that need to be talked about and sorted out."
Millwall's manager, Jimmy Nicholl, could return to first-team football at the age of 39. Nicholl, who last played in the English league 10 years ago, is contemplating playing Millwall's critical relegation game at home against Oldham on Saturday.
The former Northern Ireland full-back played for his former club, Raith Rovers, this season but his last English League game was for West Bromwich Albion in a 5-0 defeat at Tottenham on 8 March 1986.
The new Millwall manager, who played a full reserve match against Brighton on Monday, has four defenders suspended and Damien Webber is also injured.
The Football Association has commended police and stewards at Highbury for their swift action in quelling ugly scenes in Arsenal's Clock End stand after Monday's north London derby against Tottenham.
Thirteen arrests were made after rival fans hurled missiles, including bottles and broken seats, but the FA will not be taking any action.
n Dumbarton, doomed to relegation to the Scottish Second Division, are up for sale. The move follows the resignation yesterday of three directors.Reuse content