The former Scotland midfielder admitted his decision could have been avoided if a larger share of the $20million Hibernian have recouped in player sales in 2007 had been pumped into his transfer kitty.

But there was to be no U-turn this morning when 39-year-old Collins dramatically announced, at a scheduled monthly board meeting, that he would be stepping down with immediate effect.

The news was all the more surprising given just 24 hours earlier he spoke with enthusiasm about the future of the club at the opening of their new $12million training centre at East Mains.

Collins, who replaced Tony Mowbray on October 31 last year, left no-one in any doubt about the reason for his departure.

He has spent just $800,000 on players, and claims to have been forewarned that he would not be handed the full funds raised from any January transfer window sales. Left-back David Murphy could be the next player to leave for a seven-figure fee.

Collins said: "It could have been avoided but I am not blaming anyone.

"The board of directors do what they think is right for the football club and over the years, they have done a terrific job.

"It's a decision I have been thinking about for a period of time now. Everyone knows I am ambitious, I like to challenge for things; I don't like treading water.

"At this moment in time I feel like I have taken the team as far as I could.

"It's a tough job in football management and it's tough when you sell your top players."

Collins saw a host of key players leave the club, including Scott Brown, Kevin Thomson, Steven Whittaker, Ivan Sproule and Chris Killen.

It was not so much the departures which upset Collins, but the small amount of cash he was handed to find replacements.

"The club had no choice to sell the players - the money that they were offered," said Collins.

"Money is always a big talking point but it's not just about money, there are other aspects to the job.

"The board did their best for the football club, it is in a healthy state."

Collins leaves with Hibernian fifth in the table ahead of Saturday's clash with Celtic in Glasgow.

Assistant manager Tommy Craig has been handed the reins on a temporary basis as the search begins for a replacement.

Collins brought silverware to the club in March with a CIS Insurance Cup triumph but was then forced to confront a much-publicised player rebellion just weeks later.

Despite a recent poor run of results which has saw Hibernian win once in eight games, the Leith club occupied top spot in the Clydesdale Bank Premier League earlier this term.

Collins added: "I asked the question if I was going to get all the money in January if someone moved out the door, and I would not have been getting all the funds.

"Every manager is always going to want a little bit more and I am not going to tell a lie, I most definitely think they could have have given a little more back into the players.

"It's always disappointing when something comes to an end.

"There is always that sadness, there are tears in my eyes and I'm holding them back.

"Hopefully the club will go on from strength to strength.

"I have given everything and there are young players there that are only going to get better."