The relationship between club and player has been strained in recent months and came to a head on the final day of last season when Diego stormed out of the team hotel after only being named on the bench for a key encounter with Hoffenheim.

Both Magath and Diego sought to patch up their differences in the wake of that incident, indicating a willingness to work through any problems, but the pair have now confirmed they will go their separate ways following fresh talks after reconvening for pre-season training.

"After this conversation it was clear that further co-operation would be difficult and that it is better to separate," said Magath.

Diego, a club-record 15million euro signing from Juventus last summer, has a contract until 2014 and Wolfsburg will be reluctant to sell the player on the cheap, with the 26-year-old's talents - if not his temperament - likely to attract a number of suitors across Europe.

"I felt comfortable in Wolfsburg always, but I made a mistake," said Diego, who began his career at Santos and has also had spells at Porto and Werder Bremen.

"Now it's about both the club and me finding the best solution."