The Grenfell Tower inquiry has cancelled its contract with auditors KPMG after concerns were raised over potential conflicts of interest.
A statement released on Sunday night said the decision was taken following concerns raised by "core participants".
The decision comes after an open letter signed by pop star Lily Allen, politicians and academics, was sent to Theresa May urging the prime minister to reverse the decision to appoint the company.
A spokesman for the inquiry said KPMG had been appointed to provide "limited planning and programme management" during its "start-up phase".
"The company has had no role in the inquiry's investigations or decision-making processes and its contract contained strict confidentiality clauses to ensure that there could be no conflicts of interest," a statement said.
"Following concerns expressed by some core participants, the inquiry team has discussed the contract with KPMG which has agreed that its work should now cease.
"The support and confidence of all core participants is integral to the work of the inquiry."
KPMG said it was confident there were no conflicts of interest between its work for the inquiry and its other clients, although the firm recognised that "strength of opinion about our role risks undermining confidence".
A spokeswoman for the firm said: "We share the view that nothing should distract from the important work it is undertaking to better understand the causes of the tragedy at Grenfell Tower.
"We have therefore mutually agreed with the inquiry that we will step down from our role with immediate effect.
"We were appointed to advise on structuring a project management office for the Grenfell Tower public inquiry.
"Our role was purely operational and advised on project management best practice and had no role advising on the substance of the inquiry. We will waive our fees for our work undertaken to date."
The decision comes after criticism of the "big four" accounting firm's involvement with Celotex, the company which supplied Grenfell Tower's flammable cladding; the Rydon Group, the principal contractor in the building's 2015 renovation; and the Royal Borough of Kensington and Chelsea, the council responsible for the high-rise.
The signatories of the open letter said they did not speak on behalf of Grenfell Tower victims, but were "deeply concerned over the obvious conflicts of interest" posed by KPMG's involvement in the inquiry.
The public inquiry into the fire, which killed 71 people, has been dogged by controversy since the appointment of retired judge Sir Martin Moore-Bick as its chairman.
Survivors and bereaved families have lobbied for an overhaul of the inquiry's shape due to lingering doubts about his suitability for the role.
It is hoped that evidence hearings will begin after Easter.