Stace is moving to Australia where he will head up a consumer group called CHOICE.
Downing Street insiders suggested Stace had chosen to leave because of strained relations with the ‘old guard' of advisers around PM Gordon Brown, headed by Brown's top special advisor on press Damian McBride.
One well-placed source said: ‘This is an early Christmas present for Damian.'
Stace's departure follows a turbulent nine months at Number Ten during which he was frequently falsely accused of leaking to the press.
He is said to have been locked out of the loop since the summer when he was wrongly accused of leaking Gordon Brown's economic renewal plan.
Nevertheless Stace's exit is a blow to the Downing Street strategic communications unit where he is well-liked and highly-rated by colleagues.
The departure of Stace futher strengthens the hand of McBride, coming weeks after the departure from Number Ten of Stephen Carter - previously Brown's chief strategy advisor and a key enemy of the old guard.
Earlier this year, McBride was reported to have been demoted as part of Brown's summer reshuffle. But he has now re-emerged in a stronger position.
One Downing Street source said: 'Far from being pulled back, Damian's effectively been promoted. He no longer does long trips, but he is still briefing [the press] and seems to be cock of the walk at Number Ten.'
But many of those working at Downing Street believe there has also been a marked improvement in relations at Number Ten in recent months. 'The operation has settled down, it's a different place in terms of atmosphere now,' said a second insider.
Before joining Downing Street in March, Stace was director of campaigns and comms at consumer body Which?