ORLANDO, Florida (Reuters) - The Florida police chief whose department failed to arrest neighborhood watch volunteer George Zimmerman in the February shooting death of unarmed black teenager Trayvon Martin was fired on Wednesday, the city of Sanford said.

Sanford Police Chief Bill Lee had been on paid leave since March 22 amid outrage over his handling of the racially charged case in the central Florida city of 50,000.

"I have come to this decision in light of the escalating divisiveness that has taken hold of the city," Sanford City Manager Norton Bonaparte said in a statement. "The police chief needs to have the trust and respect of the elected officials and the confidence of the entire community."

After Martin's shooting, Sanford police, under Lee's command, declined to arrest Zimmerman based on his claim of self-defense. That led to a wave of civil rights protests around the country and a media firestorm.

Lee contended that Zimmerman was protected under Florida's "Stand Your Ground" law, which allows shooters who feel threatened wide latitude to fire rather than retreat.

However, police documents released later showed that the lead investigator in the Sanford Police Department believed there was enough evidence to arrest Zimmerman for manslaughter. The investigator wrote in his summary that Martin was not involved in any criminal activity, and that Zimmerman could have avoided the encounter.

The case was transferred by Governor Rick Scott to a special prosecutor who subsequently charged Zimmerman with second-degree murder.

Lee will receive a severance of three months and one week of salary, plus payment for any earned time off, the city said.

The city has already begun a nationwide search for a new chief, according to Bonaparte. Richard Myers is serving as acting police chief.

Lee previously offered to resign under a separation agreement negotiated with Bonaparte, but that offer was rejected by a 3-2 vote of the city commission on April 23.

The city did not comment on why Wednesday's action did not require a commission vote.