The club announced his exit after Sunday's defeat at Wigan, which resulted in them being relegated.
Former England coach Steve McClaren is the bookmakers' favourite.
First-team coach Kevin Keen has been placed in temporary charge and is second-favourite alongside ex-Newcastle manager Chris Hughton.
Queen's Park Rangers boss Neil Warnock, ex-Bolton, Newcastle and Blackburn manager Sam Allardyce and former Hammers defender Slaven Bilic are also among the reported contenders.
Ex-West Ham left-back Julian Dicks, now in charge of non-league Grays Athletics, threw his hat into the ring - although he admitted it would be a big step up.
"Of course it is but that's not saying I can't do the job," he told BBC Radio 5 Live. "I'd love to have the chance to do it."
For Keen, it is a third spell as caretaker manager since the departure of Alan Pardew in 2006 and he will pick the team for West Ham's final game of the season at home to Sunderland on 22 May.
But the Hammers will have only pride to play for following Sunday's 3-2 loss at the DW Stadium.
Continue reading the main story1/3 Steve McLaren
7/1 Chris Hughton
7/1 Kevin Keen
9/1 Neil Warnock
10/1 Sam Allardyce
12/1 Slaven Bilic
14/1 Martin O'Neill
14/1 Brendan Rodgers
Source: William Hill
Grant's exit was announced just over an hour after the match and West Ham co-owner David Gold used social networking site Twitter to say he wished he had "done things differently".
Gold added: "This is undoubtedly the worst moment in all the years I've been supporting West Ham.
"I honestly believed with the players we brought in in January and the imminent return of [Thomas] Hitzlsperger, we had done enough to pull clear of danger.
"I know that [captain] Scotty Parker shared that belief with me and we both had confidence that we would retain our Premiership status."
Gold told Sky Sports News that the club would 'start a whole rebuilding programme' and added: "We have to prepare a squad of players that is going to get us back into the Premier League at the first time of asking.
"West Ham is a great club with a great tradition. We're entitled to grieve but sooner or later we have to stop feeling sorry for ourselves and start believing and rather than talking about relegation we have to talk about promotion."
Former Chelsea and Portsmouth boss Grant took over from Gianfranco Zola in June 2010 on a four-year contract.
But after beginning the season with four straight defeats, the east Londoners were never out of trouble, despite the efforts of Parker, who was named Football Writers' Player of the Year.
Needing a win at Wigan on Sunday to stand any chance of staying up, Grant's side went 2-0 ahead before collapsing in the second half and eventually losing to a Charles N'Zogbia winner four minutes into stoppage time.
BBC Sport chief football writer Phil McNulty was at the DW Stadium for the match.
He said: "Rumours started to gather pace that Avram Grant had been sacked even before he attended his post-match press conference. He was asked whether he had already lost his job and said 'I am not going to talk about myself'.
"Grant then disappeared and around 20 minutes later a West Ham spokesman returned to the press room to tell the waiting media that Avram Grant was no longer West Ham's manager and that Kevin Keen would take charge of their final game.
"Grant looked close to tears throughout his final media briefing as West Ham manager and it now appears he knew his fate was sealed even before he spoke about the result that had condemned West Ham to relegation."
In his interview for BBC's Match of the Day 2, Grant described the relegation with West Ham the "most sad day" of his career in football.
"I'm also sorry for the supporters, the people in the club and the players," he said.
"Maybe this game was the story of our season. It's a tough day."
Asked about his future, Grant added: "My future is not important now. All I care about is the commitment to the team and the fans.
"It's a big club and I'm sure they will back to the Premier League."
Grant succeeded Jose Mourinho as Chelsea boss in September 2007, only to be sacked after leading them to the Champions League final, where they lost on penalties to Manchester United.
He took over at Pompey in November 2009 and defied the club's financial meltdown to steer them to the FA Cup final but could not prevent their relegation to the Championship.
West Ham owners Gold and David Sullivan appointed the 56-year-old in the hope he could establish West Ham as a Premier League force.
They bankrolled the signings of players including Germany captain Thomas Hitzlsperger, Frederic Piquionne and Pablo Barrera.
A disappointing first half of the season prompted reports that Grant would be replaced by Martin O'Neill but Grant clung to his job and was allowed to bring in Demba Ba, Robbie Keane, Wayne Bridge and Victor Obinna.
And the club's fortunes appeared to be turning when they won three of five league games in February and March, including a 3-1 victory over Liverpool.
But defeat by Wigan was their sixth in seven league matches, leaving them six points adrift at the bottom, and the club's hierarchy felt that it was time for a change.
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