Capello, 69-year-old Italian took up the role in July 2012, shortly after his resignation as England boss, and led them to the World Cup finals last summer.
Russia failed to win a match in Brazil while their Euro 2016 qualifying campaign has also struggled to get off the ground, with the team lying third in Group G having picked up just two wins from six matches.
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Capello's contract with the RFU was due to run until after the country had hosted the 2018 World Cup, but a decision has now been taken to end that agreement and he will receive £11million compensation.
'The Russian Football Union and head coach of the Russian national team, Fabio Capello, have reached an agreement to terminate his contract by mutual consent. a statement from the RFU read.
'The RFU sincerely thanks Fabio Capello for his work as head coach and wishes him every success in his future career.
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