Vegalta Sendai lost four of their opening six games prompting Arnold to initiate a meeting with the club's directors, and the two agreed to part on Wednesday morning.

Fairfax Media understands that contrary to initial media reports from Japan, Arnold was not sacked by the club despite their poor start to the season and it was the Australian coach who raised concerns with the club. Vegalta Sendai announced Arnold will be replaced by his former assistant coach Susumu Watanabe.

It is understood that there were a number of background issues that further prompted Arnold to depart the club just five months after signing from Central Coast Mariners. Vegalta Sendai head-hunted Arnold after he guided the Mariners through to the knockout stages of the Asian Champions League.

Arnold brought in a contingent of A-League personnel such as the Mariners strength and conditioning coach Andrew Clark, midfielder Mike McGlinchey and Perth Glory goalkeeper Danny Vukovic.

However, the arrivals failed to help Arnold make an immediate impact as Sendai slumped to second-last on the table following a 4-0 loss away to Urawa Red Diamonds on Sunday, which proved to be his last match in charge.

Arnold will remain in Japan in the short-term future before returning to Australia. It is understood he has already become a target to takeover as head coach at Newcastle Jets. Clayton Zane is guiding the Jets in a caretaker capacity after the club sacked Gary van Egmond mid-season. Arnold could become their primary target should the Jets fail to qualify for the finals.

Arnold has also been linked to Perth Glory and Sydney FC next season. Perth are yet to appoint a full-time coach for next season. Caretaker coach Kenny Lowe failed to steer the Glory to a top-six finish this season, while chief executive Jason Brewer has publicly expressed his desire to bring Arnold to Western Australia next season.

At Sydney FC, Frank Farina is on the cusp of getting the Sky Blues to the finals, but he is not guaranteed to avoid the axe if his side finishes fifth of below in the regular season. Sydney came close to signing Arnold nearly two years ago, but couldn't reach an agreement. The club has struggled for consistency since as two coaches and a caretaker have overseen the team. Club sources informed Fairfax Media that they will not review Farina's performance until after Sydney's season ends.