Munster have confirmed that head coach Rob Penney is to leave his post at the end of the season.

Backs coach Simon Mannix will also be leaving at the close of the season.

Penney, who initially negotiated a two-year contract with the option for a third year, has opted to decline the extension offer and so will leave the province at the end of the current season.

It is understood Penney will take up a lucrative contract in the cash-rich Japanese league.

Munster currently top of the RaboDirect PRO12 league and are through to quarter-final stage of the Heineken Cup.

Former Munster and current Ireland captain Paul O'Connell said Penney wanted to be closer to his native New Zealand, where his children will be enrolled at university.

"I know they were eager for him to stay for another year and I think it's a pity he won't be staying," said O'Connell.

"It's a shock; I suppose I'd heard rumours.

"It's disappointing, but he's got to do what's right for his family.

"Hopefully Munster will put someone in place quickly who can continue the improvements Rob has brought in the last two years.

"With us having qualified for the quarter-finals there will be a lot of interest in the job, which is great for Munster.

"It would have been great if he had stayed for another year, but that's life.

"From what I gather it's a family decision, I know he has a kid at university in New Zealand and two kids who will probably want to go to university in New Zealand shortly too.

"So this just moves him back closer to there.

"In terms of continuity I'm sure coaches like Anthony Foley will be kept on at the club, so there's plenty of stability there."

Penney assumed the head coach role at Munster for the 2012/13 season, and will now leave in the summer when his contract expires.

"I have to take this opportunity presented to me and prioritise my family and personal circumstances at this time" - Rob Penney

Former All Blacks, Sale and Gloucester three-quarter Mannix joined Munster at the same time as Penney, after a five-year coaching stint at Racing Metro in France.

Penney said he would leave to set up his family for the future, hinting at his expected move to the Japanese league.

"I am disappointed to be leaving Munster as I have thoroughly enjoyed my time here," said Penney.

"I have to take this opportunity presented to me and prioritise my family and personal circumstances at this time."

Munster CEO Garrett Fitzgerald said: "When we reach the end of the season Rob will leave with our thanks and best wishes for the future." 

"Rob has been a very positive influence on this Munster squad and management and we are disappointed to see him go as we had hoped that he would fulfil his third season.

"In developing the squad he has highlighted the strength and depth of the Munster panel, with the competition for places as high as ever.

"I would also like to take this opportunity to thank Simon for his work and commitment to the province, and we wish him all the best for the future. He has contributed to Munster's overall campaign and added great value to our coaching team.

"We now need to focus on the remainder of this season and the opportunities ahead in both the Heineken Cup and the RaboDirect PRO12.

"We are confident both Simon and Rob will continue to strive for success and guide the squad through to the next stage."