TOKYO (Reuters) — The ousted chief of Olympus, Michael C. Woodford, said on Friday that he would halt his three-month battle to replace the management of the scandal-tainted Japanese company.

Although he uncovered accounting fraud at Olympus that revealed hidden losses of $1.7 billion, Mr. Woodford failed to win over big Japanese shareholders including the firm’s main lenders, which support a board that has been blamed for failing to provide proper oversight.

The decision by Mr. Woodford, who was fired as chief executive in October, leaves foreign shareholders, who want a new slate of directors, without a champion to lead any proxy battle when the company convenes an extraordinary shareholders meeting.

Mr. Woodford also said Friday that he would sue Olympus for unfair dismissal and has instructed lawyers to start legal action in Britain. “There are no grounds whatsoever for dismissal,” Mr. Woodford told a small group of reporters in Tokyo. He said he would brief the media on Friday afternoon.