The midfielder, who joined the Cannons from Whitstable in 2013, scored 15 goals in 123 appearances and captained the club under Hythe boss Clive Cook and his predecessor Tim Dixon.
Morrish lost 1-0 against Leatherhead on Saturday after returning to the Urchins with Cook saying the club's former captain couldn't be promised a starting spot.
Cook told kentonline.co.uk: "Mo’s been a fantastic servant to the football club and a good skipper but he wants to play football all the time.
"He doesn’t want to be a bench player, he wants to be a permanent fixture. In some sides, that can happen and in other squads, it can’t. I’m not sure I could have given him as much football as he wanted.
“He’s a smashing lad and I would never say anything bad about him. His dedication and loyalty to the football club was massive.
“We parted on good terms. It’s something which is not nice for a manager to do and vice-versa for the player if you all get on but it’s one of those things you have to do sometimes."
He added: “He was honest with himself and I was honest. There’s no point me saying something which I can’t deliver.”
* Hythe Town are hosting a testimonial against Folkestone Invicta on Saturday (6th August) to celebrate John Walker's 354 appearances for the club.
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