The Post Office chairman has stepped down amid ongoing tensions around the Horizon IT scandal that saw hundreds of sub-postmasters wrongly convicted.
The organisation said Henry Staunton had been asked to leave the post by Business Secretary Kemi Badenoch.
She said the company was "rightfully" under heightened scrutiny as the public outcry over the scandal continues.
"I felt there was a need for new leadership, and we have parted ways with mutual consent," she said.
However. appearing on the BBC's Sunday with Laura Kuenssberg, Ms Badenoch acknowledged she decided Mr Staunton needed to go after looking into Post Office governance.
An interim chair is expected to be appointed shortly.
Mr Staunton had been in the position at the state-owned company since December 2022.
As part of the role, advertised with a salary of up to £150,000, he had been tasked with leading the board of directors and working to right the wrongs of the Horizon dispute.
Before that, he had worked on the board of companies ranging from ITV to WH Smith.
A Post Office spokesperson said: "On Saturday afternoon, the Post Office was informed that the business and trade secretary had asked Henry Staunton to stand down as chairman of the Post Office.
"We have been advised by the government that they will appoint an interim chairman shortly."
The government said a recruitment process would be launched in due course.
Ms Badenoch told the BBC she had been looking at the governance around the Post Office and that informed her decision that a new chairman was needed.
"It just wasn't working," she said.
"It is very difficult to be asked to stand down from a position," she continued.
"But I decided - given all of the difficulties the Post Office is having, it's not just about Horizon, it's about the entire business model, how we make it work - that we needed someone who could chair a board that was able to deal with these things effectively."
Appearing on Sky earlier, Ms Badenoch did not rule out further personnel changes at the organisation.
It comes as the Post Office is reeling from the fallout from the Horizon scandal, which has been called the biggest miscarriage of justice in UK history.
More than 700 sub-postmasters and sub-postmistresses were prosecuted between 1999 and 2015 after faulty accounting software Horizon made it look as though money was missing from their shops.
Many of those affected were financially ruined.
The issue recently came to wider public attention after it was depicted in an ITV drama. and public anger led to the former Post Office boss Paula Vennells handing back her CBE.
Senior figures from the Post Office and the technology firm Fujitsu, which developed the Horizon software, are currently facing questions at a public inquiry over what happened.
The Conservative peer James Arbuthnot, who has campaigned on behalf of sub-post masters, told the BBC he was surprised that Mr Staunton had left the role.
He said the departure was an opportunity to change the culture and governance of the organisation.
Some of his fellow campaigners have accused the Post Office leadership of being too slow to deliver compensation, and too quick to hand out bonuses to senior managers.
Their hope is that the appointment of a new chairman will signal the start of more wide-ranging changes.