Former footballer Murphy, 37, was appointed when Mark Hughes was manager.
However there has been talk of a rift with current boss Roberto Mancini, stretching back to earlier in the campaign, over City's injury list and that he was being downgraded.
Fall out: But Manchester City have denied any ill will between Mancini and Murphy
But the club stated in a statement that at no time was Murphy demoted nor did he work at any time or in any capacity in the Academy.
'We would like to thank Jamie for all his hard work and endeavourduring his time at the football club and wish him every success in hisfuture career,' the club said.
'The club can confirm that at no time was Jamie Murphy demoted nor did he at any time or in any capacity work in the Academy.'
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