Freedman, a former Forest player, took over from former England international Stuart Pearce in February 2015.
The club, who won the European Cup in 1979 and 1980, said on their website (www.nottinghamforest.co.uk) that first team coach Paul Williams will take over to the end of the season.
Former Leicester City manager Nigel Pearson is the early bookmakers' favourite to land the job on a permanent basis.
(Reporting by Alan Baldwin, editing by Ken Ferris)
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