The Sunshine Coast Falcons have agreed to release head coach Eric Smith just one year into his two-year deal so he can take up a coaching role with the Newcastle Knights NRL team.

“Eric has worked very hard during his short time here at the Falcons and after the outstanding season he has had this year, which included the 2019 minor premiership, he certainly deserves this outstanding opportunity," Falcons CEO Chris Flannery said.

"He will definitely be an asset to the Newcastle Knights coaching staff and football club and although we are disappointed to lose him - we wish him all the very best and thank him for his efforts.

“It’s fantastic to see the NRL pathway through the Intrust Super Cup is providing opportunities for coaching staff as well as players."

The Daily Telegraph has reported Smith will take on a development coaching role at the Newcastle club.

An announcement on the Falcons 2020 head coach will be made in the coming weeks.

The Newcastle Knights will officially announce their 2020 coaching staff in late October once their new coach Adam O'Brien has started.