Bosses at the retailer decided that the former X Factor judge will no longer feature in its star-studded advertising campaigns, The Sun claims.
Minogue first signed a deal with the company in March 2010, taking over from previous Marks & Spencer endorser Myleene Klass.
Models Twiggy and Lisa Snowdon are believed to have secured their spots in future promotional campaigns.
Minogue launched her own fashion line "Project D" in January 2010.
The 39-year-old has also been linked to a hosting role on This Morning following her departure from The X Factor in May.
Watch Dannii Minogue's first Marks & Spencer's TV advert below: