ATHENS (AFP) - Claudio Ranieri on Saturday was sacked as coach of Greece, the day after his side lost 1-0 at home to minnows the Faroe Islands in a Euro 2016 qualifier.

A statement from the Greek Football Federation said that the Italian would remain at the helm for the friendly match against Serbia on Tuesday and would then leave for home.

The humiliating loss to the Faroes left former European champions Greece bottom of group F and facing an uphill struggle to qualify for the Euro 2016 finals in France.

The statement said that Ranieri's departure as coach had been decided at a meeting with federation president Giorgos Sarris which had taken place "in a good climate". "There was no other option than to terminate the contract," it added referring to the loss to the Faroes.

Regarding Ranieri's compensation, although his contract called for the full amount (1.6 million euros or S$2.6 million for two years) to be paid in case of removal from his post, the two sides agreed "on a much lesser total", the announcement said.

The federation denied that a successor to Ranieri had already been found, saying that there was "plenty of time" to look for a new coach as the next Euro 2016 qualification match against Hungary was not until March.

Ranieri only took over as Greece head coach in July, replacing Portugal's Fernando Santos, who had just taken the team for the first time in their history to the last 16 of the World Cup finals in Brazil.