The 32-year-old made 123 appearances in the two years since arriving from Bristol Rovers but was stripped of the captaincy, fined two weeks' wages and placed on the transfer list earlier this summer for swearing at a supporter on Twitter.
And Coles, who was booed by fans during their pre-season games, will now play his football in the Conference after manager Paul Tisdale admitted it was 'best for everyone' that the skipper departs.
"I am sorry to see him go because Danny has been great for me and he came back after his summer misdemeanour focused and highly motivated," Tisdale told the Western Morning News. "But I think it is best for everyone, really.
"The fans have made clear their feelings and I don't think that relationship would have been repaired, and so it is best for everyone that he moves on."