Former England spinner Giles was recently overlooked for the national team's director of cricket job and Peter Moores was appointed to the role on Saturday.
"Ashley Giles has informed ECB today that he intends to step down from the panel and I would like to thank him for all his hard work and dedication to the England cause over the past six years both as a selector, and more recently as our Limited Overs Coach," chairman of selectors James Whitaker said in an ECB statement.
"We welcome Mick to the panel and his passion, cricketing knowledge and in-depth understanding of our county game will be invaluable as we seek to identify potential international talent and develop outstanding England teams across all three formats of the game."
The 49-year-old Newell has coached English county Nottinghamshire for the past 12 years.
Giles, former director of cricket at Warwickshire, was in charge of England's one-day teams from 2012 until this year's World Twenty20 tournament in Bangladesh when they failed to get past the group stage.
(Reporting by Ed Osmond, editing by Ken Ferris)
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