Grantham Museum general manager Jayne Robb's job has been axed just a day after she was suspended from the role for wrongly claiming that a Margaret Thatcher statue had been offered to the museum.
Tonight following a meeting of the board of volunteer trustees, which runs the museum, a spokesperson said the role of a general manager was no longer required.
"We have been open eight months and the time has now come to embark on a new and exciting phase for Grantham Museum.
"We have decided that the museum no longer has a need for the role of a general manager and would like to instead explore the option of recruiting a collections access officer in order for us to progress with some exciting exhibits and projects we have in the pipeline.
"As such we have undertaken a review of our contracts and staffing needs accordingly," she added.
The decision to axe the role, undertaken by Mrs Robb as a part time contractor, follows media reports in which she was quoted as saying the eight-foot tall, £150,000 Italian marble statue had been offered to the museum.
A museum spokesman said earlier today the story was 'totally inaccurate and factually baseless'.
The 1.8 tonne statue in question, sculpted by Neil Simmons, was unveiled by former prime minister Margaret Thatcher herself in 2002 at the Guildhall Art Gallery in London.
Just two months later it was decapitated by Londoner Paul Kelleher who first attacked it with a cricket bat before using one of the metal balusters used to rope off the sculpture to chop off its head.
Kelleher waited for the police to come and arrest him. He was found guilty of criminal damage and jailed for three months.
The head was later reattached and the statue is now on display - behind protective glass - in the art gallery.
The deputy curator of works of art for the Palace of Westminster, which owns the statue, told granthampeople: "There are no plans to loan the statue to anyone other than the current long term loan to the Guildhall Art Gallery."