Milicic was appointed coach of the Matildas in February last year before agreeing a deal to take charge of Macarthur, which will enter the A-League in 2020-2021.

The former international was due to take Australia to the Tokyo 2020 Olympics as his final tournament, but has stepped down after the Games were rescheduled to next year because of the coronavirus pandemic.

"FFA respects Ante's decision to honour his contract with Macarthur FC," Football Federation Australia (FFA) chief executive James Johnson said in a statement on Sunday.

"Ante agreed to become Macarthur FC's inaugural head coach prior to last year's FIFA Women's World Cup, and while FFA extended his time with the Matildas following France after receiving overwhelmingly positive feedback from the players and staff, the unfortunate rescheduling of the Tokyo 2020 Olympic Games to July-August next year has meant that a decision had to be reached. 

"We would have loved Ante to remain in the role for Tokyo 2020 and beyond, however FFA and Ante agree that overseeing two elite teams is not a workable solution, with both programs deserving of, and requiring, complete focus. 

"We acknowledge the increased professionalism that Ante brought to the Westfield Matildas over the past 18 months and wish him well in his time at Macarthur FC. Ante has been a long-serving employee of FFA, working with the Socceroos, multiple youth teams, and the Westfield Matildas, and he departs the organisation with our thanks for his many contributions to the game.

"Assistant coach Ivan Jolic and technical analyst Kate Cohen will also depart FFA to join Macarthur, and we acknowledge their contributions to the team and FFA throughout their respective tenures."

Milicic said he had simply made the decision to honour the agreement he had with Macarthur.

"I have enjoyed the past 18 months with the Matildas immensely and, in an ideal world, we would have been in Japan right now just days away from the start of the Tokyo 2020 Olympic Games," he said.

"Unfortunately, the COVID-19 pandemic and the rescheduling of the Games has created the unenviable situation where people will assess whether I have chosen one team over another.

"Truth be told, I have simply chosen to honour the commitment I made to Macarthur over a year ago, and hope that the Matildas' players, staff, and fans, many of whom I have grown close with, will accept that.

"Coaching the Matildas has been a highlight of my career – they are a great team made up of fantastic players and people, and they all have so much to look forward to and work towards. I will be following their progress individually and as a team over the next few years with interest, and look forward to watching them in Tokyo, at the Women's Asian Cup in India in 2022, and at the FIFA Women's World Cup here in Australia in 2023."