An RFU statement said Lancaster, in charge since April 2012 and under contract until 2020, had "stepped down by mutual consent".
Jake White, who coached South Africa to World Cup glory in 2007, and Australian Eddie Jones are among the leading contenders to replace Lancaster, along with English coaches Rob Baxter and Mike Ford.
RFU chief executive Ian Ritchie said England would not be rushed into finding a replacement for Lancaster.
"I think there is one simple thing -- you need to get the best possible coach," he told reporters at Twickenham. "This is not a matter of financial considerations. It is a matter of getting the best coach possible to take English rugby forward."
The RFU would look for a head coach with international experience, Ritchie said, refusing to rule out a foreign coach.
When asked if Lancaster's successor would be an Englishman, Ritchie simply said: "Getting the best coach is the priority."
England, who went into the World Cup with huge expectations of lifting the Webb Ellis Cup for the first time since 2003, failed to reach the knockout phase after defeats at Twickenham by Wales and Australia.
England let a 10-point lead slip to lose 28-25 against Wales and, needing to beat Australia to avoid an embarrassing early elimination, were crushed 33-13 by the Wallabies to become the first England side to go out of a World Cup in the pool stage.
Heavily criticised
Lancaster has been heavily criticised in the wake of England's flop, notably for selecting inexperienced rugby league convert Sam Burgess who last week turned his back on the code after one season.
Burgess's selection at centre was widely seen to have backfired with reports that it divided a young and inexperienced squad.
Initially appointed on an interim basis to succeed Martin Johnson and steady the ship after England's 2011 World Cup debacle highlighted by off-field controversies, disciplinarian Lancaster enjoyed mixed success in charge.
His record of 28 wins, 17 losses and one draw included highs such as beating New Zealand at Twickenham in 2012, along with home wins over Australia in 2013 and 2014, but Six Nations success eluded England who have been runners-up for the last four seasons.
Ritchie, who in March branded England's failure to win the Six Nations under Lancaster as "unacceptable", said the review into the team's World Cup performance had been comprehensive.
"Stuart has been fully involved and has given feedback, as well as the other coaches, players, management and a wide variety of people from around the game.
"Following the review, Stuart and I met, where we agreed that he should step down as head coach. This was subsequently ratified by the RFU Board."
RFU chairman and former England captain Bill Beaumont said Lancaster would not be taking up another role at the RFU.
The future of Lancaster's coaches Andy Farrell, Mike Catt and Graham Rowntree was unclear.
