Manchester City would be interested in signing Raheem Sterling if he were to become available, according to Sky sources.
Tottenham have completed a deal for Cologne defender Kevin Wimmer and he will join them in June, Sky sources understand.
The 46-year-old former Leyton Orient manager has been on sick leave with a stress-related illness since January.
In his absence Alan Knill guided the Gulls to npower League Two safety after taking charge in February until Saturday's 3-3 draw with Bristol Rovers, his last game in temporary charge.
"The decision is based purely on footballing grounds, after falling from play-off contenders last season to just escaping relegation this time around, and early exits in all three cup competitions," a club statement said.
"Everyone at Plainmoor would like to thank Martin for his work over the last two years and we wish him every success in the future."