Laszlo's decision follows the Baltic state's poor performance in 2014 FIFA World Cup™ qualifying, which has seen them record just two wins in eight games, both against Group G minnows Liechtenstein.
Lithuania are fourth in their six-team qualifying group, four points behind Slovakia in third, with two matches still to play. Laszlo took over in January 2012 and has overseen a sequence of two wins - against Liechtenstein - four draws and ten defeats.
The LFF said the team needed changes, adding that his contract was terminated by "mutual consent".
"I think it is the best decision for both sides," the 49-year-old Romanian-born Hungarian Laszlo added in a separate statement. Assistant coach Igor Pankratjev will be in charge for the two remaining qualifiers at home to Latvia and Bosnia-Herzegovina next month.
Lithuania, who have never qualified for a major tournament, sit 112th in the latest FIFA/Coca-Cola World Ranking.