According to a joint statement given to PRWeek, W will stop providing PR services for the supermarket from July.
The statement said: "Both parties have agreed that the company's in-house team should be able to pursue its objectives with other agency partners in the future."
PRWeek understands that the agency's work with Argos, which was acquired by Sainsbury's last year, played a part in its decision to step away from the account.
W's brief includes press office, consumer and corporate comms and CSR, and the agency was also tasked with supporting the supermarket's growth in Scotland.
PRWeek understands the account is now out for pitch. Lidl was yet to respond to request for comment at the time of publication.
Last year the supermarket said it planned to invest £1.5bn on expansion by 2019, with 280 stores slated to open in London alone. It also has plans to enter the US next year.