Antonio Conte will step down from his position as manager of Italy following Euro 2016.
Conte has been heavily linked with the managerial vacancy at Chelsea and this move increases the prospect of him taking over at Stamford Bridge.
"I feel that I must go back to being a coach in a club to have the opportunity of coaching every day," said Conte.
Conte led the Turin club to three successive Serie A titles prior to taking on the national job.
Chelsea sacked Jose Mourinho as their manager in December 2015 and appointed Guus Hiddink on an interim basis until the end of the season.
The Blues have improved from 16th to 10th in the league under Hiddink but have been knocked out of the Champions League and FA Cup.
They face missing out on next season's Champions League unless they can make up an 11-point gap in nine games.
What are Conte's credentials?
Conte is a former Italy midfielder who made over 500 appearances for Juventus, winning five league titles and a Champions League.
He won 35 caps for his country and was part of the squad that was beaten by France in the final of Euro 2000.
After spells coaching Arezzo, Bari, Atalanta and Siena, Conte returned to Juve in 2011 and guided them to the Serie A title at the first attempt and without losing a game.
However, he was then charged with failing to report attempted match-fixing during his time as coach of Siena.
Conte pleaded his innocence but was banned for 10 months - a sentence that was reduced to a four-month touchline suspension.
Juventus retained their Serie A title despite Conte's absence and won their third in succession the following season before his exit.
Who will succeed Conte?
Conte took over as Italy manager following the country's disappointing group stage exit at the 2014 World Cup under Cesare Prandelli.
He has led the side to Euro 2016 qualification by finishing top of their group and remaining unbeaten, with seven wins.
Bologna manager Roberto Donadoni and Leicester boss Claudio Ranieri have been mentioned as possible replacements for Conte.
"We will make evaluations with serenity," said Tavecchio. "For now, it's time to acknowledge this and have to deal with a person who has recovered the image of the Italian national team, his commitment and sacrifice."
Inter Milan manager Roberto Mancini has told BBC Sport it is not the right time for him to consider the Italy job.
Mancini would like the role at some point in the future but the former Manchester City manager is committed to his Inter contract, which expires in 2017.
"With Inter, I still have another year after this. My job is to rebuild a good squad at Inter," he said.
"Maybe in the future when I finish my contract with Inter Milan I will have the option - and it could be a good option. To be the Italian manager is important.
"At this moment in time it is impossible."
Mancini also said Chelsea would be making a good appointment if they hired Conte - but that hey might need to show patience at first.
"It is difficult when a manager changes championships," he said. "Probably he could have some problems at the start of his job. But if Chelsea choose this decision it could be a good decision."