The Frenchman, who took over from Park Hang-seo last year, was informed of the decision following the loss in Hanoi, which was the second defeat in six days against the Indonesians and has left Vietnam in third place in qualifying Group F.
Only the top two from each of the nine groups in the second phase of Asia's preliminary tournament reach the next round.
Vietnam have never played at the World Cup but, with Asia's representation at the finals in 2026 increased to a guaranteed eight spots, hopes had been high that the former Japan coach could take the country closer to their first qualification.
However back-to-back losses mean the Vietnamese are four points behind their South East Asian rivals and must win against the Philippines and Iraq in June and hope Indonesia fail to collect three points from their two remaining matches.
Iraq secured one of the group's two qualification spots on Tuesday as a 5-0 win over the Philippines moved Jesus Casas' side to 12 points from four games.
