The US actor and popstar joined the judging lineup this year, alongside Michael McIntyre and Amanda Holden.
Although ratings remained strong for the ITV1 reality show, Hasselhoff's role came under scrutiny from the tabloids as they criticised the new-look panel for lacking chemistry.
Simon Cowell and ITV have apparently now decided to axe the Baywatch star because he lacked a "connection with the acts", reports The Sun.
Michael McIntyre and Amanda Holden are expected to remain for the 2012 series.
Louis Walsh has previously been tipped to take over the Britain's Got Talent spot full-time after guest stints on the show in 2010 and earlier this year.
ITV reps have insisted that it is "too soon" to confirm the judging panel for the next series.
> David Hasselhoff axe rumours denied by ITV
> 'Simon Cowell' to replace Hasselhoff on 'BGT'