The 57-year-old had been under increasing pressure from Villa supporters, with one fan throwing a cabbage at him before Tuesday's game.
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Managerless Aston Villa now sit in the bottom half of the Sky Bet Championship table after winning just three of their opening 11 matches under former boss Bruce.
"Aston Villa can confirm that manager Steve Bruce and his assistants Colin Calderwood, Steve Agnew, Stephen Clemence and Gary Walsh are leaving their posts with immediate effect after having their contracts terminated", the club said in a statement on their website.
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John Terry and Dean Smith are among the early front-runners to succeed Bruce at Villa Park.
Republic of Ireland boss Martin O'Neill has had a previous spell in charge at Villa Park and Paddy Power are offering 6/1 odds on the former Northern Ireland captain making a return.
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Bruce took the club to last season's Championship play-off final but a disappointing start to this campaign has prompted the owners, who took charge last July, to make the change.