Student Loans Company head Ed Lester will stand down when his contract expires next year in the wake of controversy over his tax arrangements.
Mr Lester was paid through a company to reduce his liability for tax until Ministers intervened in February this year.
The Student Loans Company said his contract expires at the end of January next year and work had begun to recruit his replacement.
A Student Loans Company spokeswoman said: “Ed Lester’s two-year contract ends on January 31 2013. The process to recruit his replacement is under way now to ensure that there is a smooth handover in the change of leadership at the Student Loans Company.”
The arrangement for Mr Lester’s pay was disclosed in an HM Revenue and Customs (HMRC) letter obtained under the Freedom of Information Act by Exaro News and BBC Newsnight.
Following the revelations in February, Treasury Chief Secretary Danny Alexander said the way in which Mr Lester received his £182,000 salary would be changed and launched a review of similar arrangements across Whitehall.
The review identified more than 2,400 cases of public sector staff being employed indirectly – some potentially avoiding full income tax for a decade or more.
Since January, 350 such contracts have been ended.
On Thursday Mr Alexander said everyone in the public sector “should be on the payroll and paying the correct amount of tax”.