The 48-year old had seen the Midlands side win ten games out of a possible thirty one since taking over from Scotsman Eric Black back at the start of the season.
Reid promised he wouldn't quit his job earlier on in the season but supporter pressure has finally forced events to come to a head meaning the Sky Blues will now look for a new man to take the reigns.
The ex-Manchester City, Sunderland and Leeds United boss is expected to be replaced temporarily by his right hand man and former Everton team mate Adrian Heath.