Poyet - who has been tipped by some bookies to be favourite to be the next Toon manager - was originally suspended from his post for an unspecified breach of club discipline.
However, after hearing an appeal against the decision, the club has upheld the decision to dismiss him from the post.
"Following a suspension, investigation, disciplinary meeting, and separate appeal hearing, which was conducted by three members of the club's board in London on 11th July and 12th July 2013, Brighton and Hove Albion confirm that after further consideration, Gus Poyet's dismissal for gross misconduct has been upheld," read a statement on the club's official website.
"The panel's decision was delivered to Gus Poyet and his advisers a short time ago. The club's internal disciplinary process is now complete.
"In line with the club's policy to ensure and maintain confidentiality and dignity throughout this process, no further details of the disciplinary or appeal hearings will be released at this time.
"Despite the extremely disappointing end to Mr Poyet's career with Brighton and Hove Albion, the club would like to acknowledge Mr Poyet's service to the club, which included leading the club to the Football League League One championship in 2011 and to its highest league finish for more than 30 years in 2013."
The League Managers Association (LMA) swiftly issued the following statement regarding the news.
LMA chief executive Richard Bevan said: "I am really very surprised that the Club has made the decision to dispense with the services of such an outstanding football manager as Gus Poyet.
"We have every faith in Gus's integrity and have been impressed with the manner in which he has conducted himself during what, for him, has been an extremely difficult period.
"We have supported Gus throughout the disciplinary process and will continue to do so as required. We do not consider that the charges against him amounted to gross misconduct. Gus will now reflect on the outcome and discuss options with the legal team.
"It would, therefore, not be appropriate to make any further comment at this time."
Poyet is a good friend of Mike Ashley, and several national newspaper have linked him with Alan Pardew's job.
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