Following a successful playing career Powell took on the head coach role in 1998, guiding England to the European Championship final four years ago where they lost to Germany.
The recent disappointment of the latest European finals, however, where England bowed out in the first round, has undoubtedly played a part in Powell's departure.
Regarding the decision, FA general secretary Alex Horne said: "Hope deserves a lot of credit for her commitment to developing the national teams over such a long period.
"The high point was undoubtedly reaching the European Championship final four years ago.
"However, after the disappointment of the recent tournament in Sweden, the Club England board believe the time is right to make a change and for a fresh outlook.
"I'd like to place on record the organisation's thanks to Hope for her efforts and wish her every success in the future.
"Hope will always be welcome back at Wembley Stadium and St George's Park, and she leaves a strong legacy having helped the FA build the women's game to the strong position it is in today."
Despite the progression in women's football over the years, with the 46-year-old Powell an integral part, the FA believe it is vital they now build for the future.
In doing so, the FA has made clear that as with the men's game, they will not be limiting themselves to domestic candidates when it comes to the search for Powell's successor.
Timing is also of the essence as England begin their qualifying campaign for the 2015 World Cup with home matches against Belarus and Turkey on September 21 and 26 respectively.
Horne added: "The FA has made significant investment into the women's game over the past 20 years and this has seen major developments such as the FA Women's Super League.
"It is important we continue this development at major tournaments so we can compete with Germany, France, Spain and the Nordic countries in Europe, in addition to the likes of Japan, Brazil, the United States and Canada at the 2015 World Cup.
"We will now look to recruit a new head coach and a technical lead for women's football who will report to Dan Ashworth (FA director of elite development).
"We will be speaking to people from across the game both domestically and internationally before making any appointments."
Powell, who collected an OBE in 2002 and CBE in 2010, became the first woman to achieve the UEFA pro licence in 2003.
That followed a playing career which saw her play in four FA Women's Cup finals, including captaining Croydon to a league and cup double in 1996, as well as scoring 35 goals in 66 appearances for England.
During her time as England head coach, the team reached the finals of four European Championships and two World Cup finals.
In light of Powell's exit it is likely she will be in the running for managerial positions with a Football League or Conference club as and when they become available. She was linked with Grimsby in 2009.
- Sports & Recreation