Ruddock, who took over from Steve Hansen two years ago and was at the helm for Wales' first Grand Slam in 27 years last season, has decided to leave his post for family reasons.
"Mike informed me today that he will not be seeking to extend his contract as Wales' national coach," said WRU Chief Executive Steve Lewis.
"His announcement, and the timing of it, has obviously come as a shock and will be a blow to Welsh rugby as a whole. It is public knowledge that we have been in contract negotiations with Mike for some time in order to agree an extension through to the 2007 Rugby World Cup and beyond.
"We had reached agreement on the terms of the contract, but clearly Mike has indicated reasons for not signing which are beyond those which are capable of negotiation and I understand his position.
"It is disappointing that Mike has not been able to commit himself to a new deal and we now have to respect the decision he has reached about his future and his reasons for it. The role of head coach to the Welsh National Team carries immense pressures, and the expectations of a nation, and Mike, with a young family, has found these, and the commitment required of the position over the next two years, unacceptable.
"His place in Welsh sporting history is already assured for what he has done for Welsh rugby in such a short space of time. He will leave with our blessings and the heartfelt thanks of Welsh fans around the world and we wish him the best of luck with his future endeavors. I hope that the press will leave him to the privacy he requires.
"As a result of Mike's decision it has been agreed between us that it would be inappropriate for both him, and for the team itself, for him to continue to prepare the team for the remaining games in the RBS Six Nations championship and I have asked Scott Johnson to assume that responsibility for the games against Ireland, Italy and France.
"There is still all to play for in the championship following our win over Scotland last weekend. Scott, in conjunction with Clive Griffiths and the rest of the National Team management, is dedicated to delivering further good results and performances."
The most successful head coach to lead Wales for the last 30 years leaves the top job in Welsh sport with the stated intention of putting his young family first.
"After consultation with my family, I have made the decision to stand down as National Coach," said Ruddock.
"On that basis, I have decided to withdraw from contract talks to take Wales to the 2007 World Cup in France. This has been a tough decision to make but I have decided to put my family first.
"What I have found during my two years as coach is that this position is 'more than a job'. That has meant I have spent long periods away from my family, in camp and on overseas tours.
"As a consequence, I felt the intense build-up to next year's World Cup would mean more time away from my family. That is something which, on reflection, I would like to avoid.
"Therefore, I have taken the decision to stand down as national coach. I would like to thank the WRU for providing me with the opportunity to coach my country at the highest level.
"I would also like to take the opportunity to thank my fellow coaches, my support staff and the players for their contribution and support in what has been a very enjoyable couple of years.
"I must also place on record my sincere appreciation of the role the Welsh public has played. Quite simply, they have been outstanding in their support of the Wales team and myself and I must thank each and every one of them.
"I wish the WRU and the Wales team the very best in the future. There are another three fixtures left in the Six Nations and I firmly believe we can win them all to give us a chance of retaining our title."
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