Towns, in charge for 18 months, helped the team qualify for the Olympics but in Beijing they did not win a game and finished 12th and last.
"You can't have results like I did in Beijing and expect to carry on," Towns, 60, said.
"As an organisation, Hockey NZ could not reappoint me," he told the New Zealand Herald.
"I have said that all along. You can't have results like that when an organisation is funded in the way it is.
"The stark reality is we didn't win a game (in Beijing). I took it on with eyes wide open.
"As an individual I'm obviously disappointed in the results. But I have enjoyed the 18 months I had coaching the team."
Hockey New Zealand chief executive Ramesh Patel said he did not blame Towns, who had two stints as national men's coach, for the women's failure to win a game at the Olympics.
"What we must do now is wait for the independent high-performance review which is nearing completion and see what that recommends."
Applications for the position could be called as early as next week, Patel added.
