Woods said: "I want to express my deepest gratitude to Stevie, but I think it's time for a change.
"Stevie is an outstanding caddie and a friend and has been instrumental in many of my accomplishments. I wish him great success in the future."
Williams has been working with Australian Adam Scott at the last two majors, and Woods has made no announcement yet about who will replace him when the 14-time major champion returns to action after his injury.
Williams was Woods' caddy for 13 of those 14 major wins, and was at one stage thought to be New Zealand's highest earning sporting figure.
Speaking to his
, Williams confirmed the end of his relationship with Woods and revealed he would team up with Scott on a permanent basis.
He said: "After years of loyal service needless to say this came as a shock.
"Given the circumstances of the past 18 months working through Tiger's scandal, a new coach and with it a major swing change and Tiger battling through injuries, I am very disappointed to end our very successful partnership at this time.
"I have had the opportunity to work of late for Australian Adam Scott and will now caddie for him on a permanent basis.
"Having started my caddying career with Australian great Peter Thompson and working for Greg Norman in the 80s I am excited about the future working for another Australian. "
The only caddies Woods has used in his 14-year career on the PGA Tour are Mike Cowan and Williams.
His childhood friend, Byron Bell, caddied for him when he won the Buick Invitational in 1999 and 2000, and Billy Foster caddied for Woods at the Presidents Cup in 2005 when Williams was home for the birth of his son. Foster now works for Lee Westwood.
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