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It was thought that he would be able to return after a period away but today formally resigned his position after discussions with his family.
In a brief statement McAllister said: "After much consideration and discussion with my family, I have reached the decision that it would be better to sever all ties with Coventry City at this time so the Club can clearly focus on the future.
"I would like to express my gratitude to the Club, the players, the staff and all the fans for their support and wish Coventry City every success in the future."
In response the Coventry Chairman Mike McGinnity said: "I’m extremely sad that Gary has decided to leave. I and the rest of the board completely support his decision and would like to thank him for his hard work here.
"We wish him and his family the very best of luck for the future."
Eric Black will continue for now in a caretaker capacity with Coventry set to make an announcement on the manager’s position in the near future.
Again Clarets Mad send their best wishes to Gary McAllister and his family.