Jack Dorsey is stepping down as chief executive of Twitter after saying that the company needs to “break away” from his grip as its founder.

Mr Dorsey, who will be replaced by chief technology officer Parag Agrawal, said that it was his decision to leave and added: “There aren’t many founders that choose their company over their own ego.”

Twitter stock climbed as much as 12pc when rumours of his departure emerged but fell after the news was confirmed to trade down 1.1pc on the day.

The 45-year-old founded Twitter in San Francisco in 2006. He was fired two years later over concerns about his management style, amid claims he was distracted by outside hobbies, but returned as chief executive in 2015 after the company went public.

He also runs the payments company Square, which is worth almost $100bn and accounts for most of his $12.3bn (£9.2bn) fortune.

In an email to employees, Mr Dorsey said: “There’s a lot of talk about the importance of a company being ‘founder-led.’ Ultimately I believe that’s severely limiting and a single point of failure. I’ve worked hard to ensure this company can break away from its founding and founders.”

He added: “I want you all to know that this was my decision and I own it… There aren’t many companies that get to this level. And there aren’t many founders that choose their company over their own ego. I know we’ll prove this was the right move.”

Mr Dorsey has come under heavy pressure during his time at Twitter for allegedly failing to deal with its hate speech issues. 

He was criticised by Republicans last year after Twitter blocked users from sharing a New York Post story containing claims against Joe Biden’s son Hunter ahead of the presidential election.

The entrepreneur also apologised in 2018 after praising Myanmar following a visit to the country in which he meditated in its temples. He described its “amazing food” and people “full of joy” at a time when the country’s military was accused by United Nations agencies of committing genocide against ethnic Rohingya Muslims.

Mr Dorsey survived an effort from activist investors Elliott Management and Silver Lake Partners to oust him last year. 

However, his dual roles running both Twitter and Square have led to repeated questions over Mr Dorsey’s leadership. Before appointing him in 2015, Twitter’s board said it would not hire somebody who could not commit full time before changing tack.

He had come under fire for outlining plans to temporarily move to Africa while continuing to run both companies, but cut a deal with the investors that allowed him to remain in charge.

On Sunday, he tweeted: “I love Twitter.”

Mr Agrawal has worked for Twitter for more than a decade and been chief technology officer since 2017.

Bret Taylor, a Salesforce executive, has been named as the company’s new chairman, succeeding Patrick Pichette who will remain on the board. Mr Dorsey will also stay on the board until the 2022 annual meeting.