In a statement, the FA said the 50-year-old Italian would be leaving, although he could return temporarily if England qualify for the finals in Poland and Ukraine.
Baldini will become Roma's new general manager and the FA stressed he would not start his new job until England's qualifying campaign is completed.
"It is important to make clear that Franco will continue in his current role on a full-time basis until either October or November 2011, depending on England's progress in their qualifying group. He will not commence his work with Roma until after this time," the FA said.
"Franco has taken this decision with the full agreement of Fabio Capello. At this time, it is to be decided if Franco will return to work with Fabio and the England team for their February friendly and the European Championship [subject to qualification]."
Baldini was Roma's director of football for six years until March 2005 when he left, joining Capello at Real Madrid in 2006 before the two started working with England in January 2008.
Capello said: "Franco has been given a good opportunity by Roma, but I am happy he will stay with me and the England team until after the qualification programme.
"For me this is very important. We can decide after this if Franco will be with us for the European Championships."
DE ROSSI STAYS
Meanwhile in Italy, Roma say they have no intention of allowing midfielder Daniele De Rossi to leave the club where he has been since he was 16.
The 27-year-old has been linked with a possible move to Manchester United, Manchester City or Chelsea, but director of sport Walter Sabatini told Gazzetta dello Sport the club want to keep the midfielder who has played 63 times for Italy.
"De Rossi's sale is not on the agenda, just as his contract renewal negotiations are not on the agenda for today," director of sport Walter Sabatini told Gazzetta dello Sport.
"I cannot weaken the side. By selling De Rossi and then bringing in Javier Pastore [from Palermo] or anyone else, I would still be weakening Roma.
"I have spoken to Daniele, we will speak with his agent and make an offer."
