Liverpool Council said its decision to end its partnership with BT pre-dates the controversy and criminal investigation into One Connect in Lancashire.
The city council’s cabinet has agreed to finalise negotiations to end the £70m-a-year deal called Liverpool Direct Limited.
The move comes as police continue their inquiries into a similar operation run by LDL chief executive David McElhinney, who was a key figure in Lancashire’s One Connect.
The One Connect probe followed an internal County Hall report which raised concerns about the awarding of contracts by the company.
County Council chief executive Phil Halsall was suspended from his £190,000-a-year post and later resigned.
The Liverpool proposal, made by Liverpool Mayor Joe Anderson, was said to come “after several months of negotiations between the parties.”
LDL currently provides a range of services for the council as part of the partnership created in 2001. Negotiations will end on March 31.