Queens made an impressive start under Skelton and led the Championship for most of the first quarter, but have slipped to sixth following a recent downturn in results.
The club cited personal reasons for his departure, but both parties were refusing to comment last night.
Football development manager Jim Thomson will prepare the Doonhamers for their Irn-Bru Cup tie with Alloa this weekend.
l Annan manager Jim Chapman is hoping his side click into gear in tonight’s League 1 clasg with Montrose after coming off the rails late on against Arbroath on Saturday, losing an injury-time goal to go down 2-1 after leading at the break. Chapman said: “Arbroath have tremendous resources as was shown when they took quality strikers off and brought quality strikers on. However, we played well in parts against them but things never quite clicked into place for the entire game.
“We have the chance to move on quickly by defeating Montrose. If we get the right response to Saturday’s disappointment I am sure we can win this game.”