Ray Wilkins has reached what he describes as a "harmonious conclusion" with Chelsea following his unexpected and controversial departure from Stamford Bridge.
Wilkins was informed his services were no longer required by the Blues last month and was replaced as Carlo Ancelotti's assistant by Michael Emenalo. Wilkins described the decision as an "undoubtedly unfair dismissal".
After consulting lawyers, Wilkins, with the support of the League Managers Association, has now reached a settlement with Chelsea.
Wilkins said in a statement: "It has obviously been a big wrench leaving such an illustrious club and one which has played such a huge role in my playing and coaching career. I have great affection for the club, the staff, the players and its supporters and wish them all the very best for the remainder of this season and the future. I would also like to thank the club and the LMA for ensuring that matters have been brought to a swift and harmonious conclusion."
LMA chief executive Richard Bevan said: "All parties are delighted that an agreement has been reached in a cordial and professional manner. I am sure that a manager of Ray's experience will be back involved in a managerial or coaching capacity soon."
Wilkins initially joined Luiz Felipe Scolari's coaching team in September 2008, before being praised by Carlo Ancelotti for his influential role in the club's success in winning the Double last season.
Chelsea chief executive Ron Gourlay said on the club's official website: "I am pleased to announce that we have come to a swift and amicable agreement with Ray Wilkins and all unresolved matters have now been settled. I would like to take this opportunity to thank Ray for his service to the club and wish him all the best for the future."