Club president Florentino Perez announced at a hastily-arranged press conference he wanted to reorganise the club in the style of an English one and give Mourinho more authority.

The former Chelsea and Inter Milan boss has clashed repeatedly with Valdano during an eventful first season in the Bernabeu hotseat.

"I have always respected Real Madrid. I've never turned the club into a battlefield," Valdano said.

"I always put my position as director general before who I am, and I have always avoided fighting that battle.

"I have great respect and love for this club, and all my efforts were aimed at living up to the greatness of this team.

"I believe Jose Mourinho staying on is good for a club that's been unstable in the past. It needs to settle for a reasonable period of time. He's done a good job, I believe he is a good coach and I find it normal that he stays on.

"Real Madrid is great, which doesn't mean this new structure belittles it. The president came up with this solution to resolve a difficult situation that wasn't easy to manage.

"It is always painful to leave people and places you love. The public had to know about this and I wished to say goodbye."

Mourinho and Valdano have not seen eye to eye throughout the campaign as Madrid's great rivals Barcelona beat them to the Primera Division title.

The Catalans also knocked Madrid out of the Champions League at the semi-final stage, although Mourinho did lead the capital club to their first Copa del Rey success in 18 years, beating Barcelona in the final.

"The experience of the season just ended has shown the need for new organisation at the club, giving autonomy to our coach," said Perez.

"This is the first step in our reorganisation process which we will develop in the coming weeks.

"I will not hide how painful the departure of Jorge Valdano is. We have come a long way together. But my feelings cannot be a reason for not fulfilling what I believe is my obligation. Jorge, I appreciate all your hard work and dedication."

He added: "Mourinho did not make any demands. He asked for more autonomy in line with how English clubs are organised.''

Mourinho had been linked with a shock return to Chelsea following the departure of Carlo Ancelotti, but now looks set to remain in Spain.