However, Davies, who has previously worked as Director of Rugby at Leeds and Scarlets, met with club officials today and tendered his resignation.
The existing coaching team at Blues will now take charge of senior team matters in the interim period as the region now begins to plan for the future.
Richard Holland, Cardiff Blues Chief Executive, said: "I've always enjoyed a strong relationship with Phil and would like to thank him for his contribution to Cardiff Blues during his tenure.
"Throughout his time at the region, Phil has worked passionately to develop the right infrastructure here and a pathway for aspiring players and coaches. He has overseen a period of massive change and I'm sure in the future we will see the benefits of his work.
"We now look to take the region forward with new leadership and, on behalf of all the staff at the Blues, I would like to wish Phil and his family every success in the future."
Davies said: "This is a decision that I've not taken lightly, but one that I've made in view of my future career and my past experiences in professional rugby. I've enjoyed the role and the leadership, processes and the high performance elements. I feel this is the right time for me to look to the next challenge and other opportunities in performance development.
"It's been two years of massive change at Blues, in terms of the systems we have put in place. When I came here I was told to look at the bigger picture and make changes as a totally new group of young players came through.
"I've been delighted to see talented youngsters like Rhys Patchell, Owen Williams, Josh Navidi and Cory Allen gain international honours while the likes of Macauley Cook, Kristian Dacey and Sam Hobbs have all developed and are the building blocks for the future.
"I'm proud of the work that has gone on to put this region in a stronger position. The career pathway for players and coaches is now clear, from age grade rugby to the Academy and Premiership. We have an excellent Academy system and the coaches in place, with men like Dale McIntosh and Paul John, to really drive this region forward.
"I would like to thank the Chairman, Peter Thomas, for his fantastic support both during my time at the region and also as a player and coach. The support I've always had from him and his family has been fantastic and I'm grateful for that. Also I want to thank Richard Holland and the rest of the Board of Directors at Blues for their support over the last two years. Finally, I pay tribute to all the team at Cardiff Blues for their hard work, dedication and professionalism.
"I'm sure with the squad being assembled for next season and beyond, Cardiff Blues will enjoy a bright future and I wish them every success."