The club will now begin the process of recruitment.
Flynn is said to have considered quitting after last season's play-off final against Morecambe which the Exiles lost. However he decided to carry on and has brought in 15 players to date for the current campaign.
Newport are 15th in League Two.
Former Hereford general manager James Watts twetted: 'Was a pleasure to work with Michael whilst I was at Newport, he is the best Newport County AFC manager ever in my opinion and I wish him well in the future.'