The news has been greeted with delight by Rangers fans - many of whom saw the Yorkshireman as a disruptive influence at Ibrox.
Mr Green's decision to step down and his plans to sell up his shares comes a day after the Evening Times revealed three major supporters organisations called for him to be removed from his role.
The former Gers chief executive returned to Ibrox earlier this month, just weeks after he stepped down from his position in the boardroom following allegations of links with disgraced ex-chairman Craig Whyte and a series of controversial comments.
His departure is a major development in the ongoing battle for control at Ibrox and comes after a conference call with the Gers hierarchy.
Mark Dingwall of the Rangers Supporters Trust told The Evening Times: "I am delighted that Mr Green is moving on.
"The chaos of the last few month has almost entirely been down to him and his colleagues behaviour.
"It has not been good for the club and I hope that the process of 'cleansing' that Ally McCoist referred to can now continue to sweep all of the bad elements out of Rangers.
"We want a healthy and vibrant club to support once again.
"I take my hat off to Mr Green for raising £22million in the IPO for a Third Division club in the weeks before Christmas.
"However, the baggage that he has brought to Rangers in the last few months has been extremely bad for the club.
"I am glad that he has stepped down from his position and is set to sell his shareholding."
While Green's exit has been welcomed by the Light Blue legions, there are still several major issues to be addressed by the Gers hierarchy.
Chief executive Craig Mather will head a board meeting tonight where he, Finance Director Brian Stockbridge and directors James Easdale, Bryan Smart and Ian Hart will discuss the requisition notice, which they must respond to by Friday, put forward by Blue Knights leader Paul Murray and respected Scottish businessman Jim McColl calling for sweeping changes to be made at the highest level at Ibrox.
Mr Dingwall said: "Fans will hope that we can put this episode behind us and Rangers move forward once again.
"We need to ensure that the board is comprised of people who have the good of Rangers at heart and will do what is best for the club.
"We need people who the fans can trust and also who have a proven ability and track record in their respective fields.
"The board meeting tonight is still very important. They still have plenty to discuss."
This afternoon the club issued a statement which said: "Following a board meeting this morning the Club’s directors decided to terminate the consultancy agreement with Charles Green. The decision was unanimous and takes effect immediately.
"However, the board wish to make it clear Mr Green was not the only point on the agenda at today’s meeting.
"The directors can state categorically that they have always been open to adding to the current size of the Board and are actively seeking a new chairman, one who will bring instant and significant benefits. In particular it will be necessary to connect strongly with Corporate Britain if the Board’s ambitions for Rangers are to be fulfilled.
"This board has been working tirelessly to find an intelligent solution to the request for a general meeting and all of the directors are open to sensible and reasonable additions. For instance, the board are not against Frank Blin becoming a director but do have reservations about other proposals.
"Even so, the directors remain hopeful compromise can be reached and that everyone, the fans especially, will see this club emerge a much more stable and vibrant operation.
"It is the board’s belief that with the right level of understanding from all sides Rangers will prosper and be stronger than at any time in its history. This is what the directors are committed to achieving through the work of an enhanced but perfectly balanced board."