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The Villa board has accepted the 58-year-old former England boss' resignation, which takes immediate effect.
Taylor said: "Contrary to what may be perceived, playing results are not the reason for my resignation and I had always believed that last season was going to be one of transition, particularly in respect of emerging young players.
"I would however point out that modern football, with its well publicised financial pressures, involves much wider issues than mere playing matters and those are a major factor in my decision."
Villa chairman Doug Ellis expressed his sadness at Taylor's departure but said that the club hoped to have a replacement "in place prior to the return of the players for pre-season training."
Taylor took over at Villa Park for a second time in February last year following John Gregory's departure.
But the Midlands club struggled in the Premiership and only narrowly avoided relegation in contrast to his first spell in charge of the club between 1987 and 1990.
Personally I don't think he should of gone back to Aston Villa, as I don't agree with managers going back to previous clubs, it somehow doesn't work, what does everyone else think?
Can believe someone as famous as him had such bad teeth!
Never wanted Taylor to be the Villa manager in the first place, and couldn't beleive what he did at the start of the season. Sold our best Midfield players for NOTHING. We would of finished above Birmingham if we never got rid of Merson and Boateng.
The Villa board has accepted the 58-year-old former England boss' resignation, which takes immediate effect.
Taylor said: "Contrary to what may be perceived, playing results are not the reason for my resignation and I had always believed that last season was going to be one of transition, particularly in respect of emerging young players.
"I would however point out that modern football, with its well publicised financial pressures, involves much wider issues than mere playing matters and those are a major factor in my decision."
Villa chairman Doug Ellis expressed his sadness at Taylor's departure but said that the club hoped to have a replacement "in place prior to the return of the players for pre-season training."
Taylor took over at Villa Park for a second time in February last year following John Gregory's departure.
But the Midlands club struggled in the Premiership and only narrowly avoided relegation in contrast to his first spell in charge of the club between 1987 and 1990.
Personally I don't think he should of gone back to Aston Villa, as I don't agree with managers going back to previous clubs, it somehow doesn't work, what does everyone else think?