The 65-year-old former Rangers manager replaced Malcolm Murray in May, and the club looked to be moving forward following promotion from the bottom tier of Scottish football.

However, the return to the club of former chief executive Charles Green as a consultant last week has proved controversial after he said in a newspaper interview that manager Ally McCoist should win the league and cup this season or face the consequences. 

That triggered an angry reaction by McCoist following Saturday's shock 2-1 Scottish League Cup defeat against Forfar Athletic.  

McCoist blasted: "His contempt and total lack of respect for my players, for our football club, for our support and Scottish football in general is appalling."

Smith, who has also stepped down as a director of the Scottish League One club, has now decided to remove himself from the situation at Ibrox as the off-field issues continue to rumble on.  

Former Scotland manager Smith, who won 10 Scottish Premier League titles during two spells in charge of Rangers as manager, is expected to release a statement shortly outlining the reasons for his decision.