Crystal Palace’s sporting director Iain Moody has resigned after the Football Association opened an investigation into alleged misconduct relating to his time working at Cardiff City alongside Malky Mackay.

Moody and Mackay are being investigated over allegations that racist, sexist and homophobic text messages were prevalent at Cardiff during their time in charge.

Cardiff submitted a dossier to the FA regarding the alleged misconduct of Mackay, their former manager, and Moody, the former head of recruitment. Mackay had been expected to become the new Palace manager and be reunited with Moody at Selhurst Park, but a deal collapsed on Wednesday.

Palace have since confirmed Moody has left his role, saying in a statement: “In light of the events of yesterday, Sporting Director Iain Moody has tendered his resignation and it has been accepted with immediate effect. There will be no further comment from the club on this matter.”

The dossier compiled by Cardiff was sent to the FA by the law firm Mishcon de Reya, who searched the homes of both Mackay and Moody earlier this year. The club’s owner, Vincent Tan, was severely criticised when he sacked Mackay last season and replaced the Scot with Ole Gunnar Solskjaer.

An FA spokesman said: “The FA can confirm it is currently investigating this matter.”

Facebook Twitter Pinterest Cardiff have made allegations about text messages alleged sent by Malky Mackay. Photograph: Cal Sport Media/REX

The document also contains information about a number of transfers that took place during Mackay’s time at Cardiff, who he took from the Championship to the Premier League before Tan sacked him in December 2013, two months after Moody was placed on gardening leave before being dismissed himself.

After his departure Mackay had launched a legal claim against Tan totalling £7.5m, for wrongful dismissal and compensation. He dropped the action in May and apologised “without reservation” to Tan, saying: “wherever mistakes were made during my time at the club, I wish to apologise for any part that I played in them, and for any offence I might have caused, particularly to Tan Sri Vincent Tan and all City fans.”

Mackay could potentially avoid action from the FA if the governing body decides that the alleged text messages were private. In May the FA took no action against the Premier League chief executive, Richard Scudamore, when sexist emails from his work inbox were leaked to the press, citing that its policy was not to act on “private communications”.

Facebook Twitter Pinterest Cardiff owner Vincent Tan sacked Malky Mackay in December 2013. Photograph: Paul Mcfegan/Sportsphoto/Sportsphoto Ltd./Allstar

Cardiff have not commented since the submission of the dossier. The Gay Football Supporters’ Network released a statement on Wednesday night calling on the FA to “fully investigate” the allegations against Mackay and Moody.

Their spokesman, Simon Smith, said: “The GFSN is saddened to hear reports of alleged homophobic comments by Malky Mackay. Homophobia is still a problem in football and we expect a high standard of conduct from managers, who should be setting a positive example of inclusion. We will be following the story closely and asking the FA to fully investigate the allegations.”

Crystal Palace’s search for a replacement to Tony Pulis is expected to extend beyond their match against West Ham on Saturday. Keith Millen will take charge of the team again for the London derby.

The Premier League recently found Palace guilty of breaching rule B16 over the “spy-gate” scandal, stemming from the alleged leaking of Cardiff’s starting lineup before the two sides’ match in April last season.