Grant, 50, has been frustrated with the turmoil regarding the renewal of his contract and with the IFA's attitude towards him since the end of the World Cup qualifying campaign. "I'm fed up with all the frenzy about my future, I'm leaving the team," Grant said following his resignation.
The short letter of resignation read: "I [Grant] would like to notify that with the completion of my contract in June 2006, I will be leaving my position as Israel's National Coach."
Earlier this month Grant became the first Israeli Coach to lead the national team to an unbeaten campaign. The four wins and six draws in the World Cup qualifiers were not enough and the team finished third in its group, missing out on a playoff spot by goal difference.
Grant is not planning on staying idle long and it is speculated that he is set to sign a contract with Betar Jerusalem in the near future.
The coach is believed to have met with representatives of owner Arkadi Gaydamak in the last few days, who promised him a long term contract and a transfer budget on a scale never seen before in Israeli soccer.
Grant has come under fire in recent weeks from local media and fans over his failure to lead the blue-and-white to next year's World Cup.
The coach is known to have felt that the achievement of finishing the campaign unbeaten merited the renewal of his contract and was bitterly disappointed by the manner in which he was treated by the IFA and its chairman Itche Menahem.
The chairman and Grant met for a long and intense conversation on Wednesday morning during which the coach handed in his letter of resignation.
Menahem said after the meeting: "Avraham requested to meet with me this morning. He handed in his letter of resignation and we spoke for an hour afterward."
Menahem admitted at being surprised by the timing of the resignation and said: "We will now look for a replacement and we will be speaking to several coaches and then make a decision."
Hapoel Tel Aviv coach Dror Kashtan is the firm favorite to take up the position. 61 year-old Kashtan has missed out several times at becoming the national coach, but it now seems likely that he will fulfill his long lost dream.
Kashtan has a clause in his contract allowing him to leave the club to join the national team and Hapoel have already said that they will not stand in the way of their coach.
Yitzhak Schum, who steered Panathinaikos to the Greek league and cup double in 2004, is also an outside candidate for the job.
The prospect of a foreign coach is also being considered with German Klaus Topmuller already being mentioned.
Grant's future had been the talk of the town even before the World Cup campaign ended and everybody appears to have made their opinions on the issue clear.
Star midfielder Yossi Benayoun was Grant's main advocate. Following the end of the World Cup campaign earlier this month, the midfielder said: "Grant doesn't only need to continue as coach He must continue as coach."
On the other hand Grant came under an unprecedented attack by former Israeli international, Eyal Berkovic who said about the coach on Channel 2 last weekend: "He deceives everybody, he claims achievements that he hasn't accomplished."
Grant himself never commented on his future and has now decided to put the chaos behind him and leave on his own terms.
Grant never played as a professional soccer player and began his senior coaching career at Hapoel Petah Tikva. Grant left Petah Tikva for Maccabi Tel Aviv and won the national championship in the 1991/1992 season.
In 1995 he left for Hapoel Haifa, only to return to Maccabi a year later. Grant left Tel Aviv once again in 2001 and joined Maccabi Haifa. He helped the northern club to two consecutive championships before succeeding Dane Richard Moller Nielsen to take over the national team in May 2002.
His first mission as coach was to qualify for the 2004 Euro championships which ended in a bitter failure, losing three games and finishing in third place behind France and Slovenia.
The 2006 World Cup campaign was far more successful with the team ending their 10 games unbeaten. Israel eventually finished third behind France and Switzerland and failed to progress to the World Cup.