Following the monthly board meeting yesterday the clubs board have decided to end Thordarson's contract with immediate effect.
Former manager Dario Gradi has been placed incharge of the first team and is taking the training session this morning as he looks to guide Crewe to a win.
Thordarson signed a rolling contract at the begining of the year following the sacking of Steve Holland back in November 2008.
His arrival brought a few good results and the manager of the month for February but Thordarson failed to win any of his last ten league games as the Railwaymen got relegated to League Two for the first time since 1994.
This season Crewe started with a defeat to Dagenham and Redbridge but then bounced back with three straight wins as they cemented a place in the play-offs but with one win in the last seven games and a 3-2 defeat to Bury on Tuesday seemed to have been the last straw for the clubs board.