Tony Blair is to step down as Middle East envoy for the Quartet of powers after eight years in the role.
The former prime minister will quit the role - which he took up immediately after leaving Downing Street in 2007 - next month.
Sources said that, although Mr Blair will no longer represent the group of the UN, the US, the EU and Russia, he plans to remain "active on the issues".
Mr Blair has written to UN secretary general Ban Ki-Moon to confirm his departure from the unpaid position.
A source close to Mr Blair insisted he remains "fully committed" to helping to make progress on a two-state solution between Israel and the Palestinians.
But he believes he can "best support these efforts through working with the key regional players, the USA, the EU and others, without any formal role".
The ex-premier is understood to feel that the Quartet post was "limited" to supporting the Palestinian people on economic development and strengthening institutions.
Although "much has been achieved", it was "despite the political constraints".
The source said Mr Blair was convinced an "entirely new approach" was needed to make progress.
"He will concentrate on strengthening relations between Israel and the wider Arab world, drawing on his considerable experience and the relationships he has built in the region to advance this work," the source said.
"He believes that this could help underpin international efforts to end the ongoing impasse in the peace process."