The club made the announcement just minutes ago which can be read in full HERE.
Goalkeeping coach Derek Jackson has also departed.
The statement also confirmed that Holt, who previously managed the Bairns in 2013-14, will also lead the process, in conjunction with the Board of Directors, to recruit a new first-team coaching set-up for the 2021/22 season.
Falkirk FC Chairman Gary Deans said: “It’s never easy having to ask people to leave the football club and this is no different. Both Lee and David, as well as Derek Jackson, have been good servants to this Club but we all must acknowledge that things have not worked out as envisaged. Recent performances and results have not been good enough and change is required. We thank all three for their contribution to Falkirk FC over a number of years and wish them well for the future.
Deans continued – “We are grateful that Gary Holt has agreed to assume temporary control of first-team duties. This was not the role that Gary was originally recruited for, and both he and the Board of Directors, are keen to undertake a rigorous process to recruit a new first-team coaching set-up which will allow Gary to return to his Sporting Director duties and to continue building on the positive work undertaken so far.”