New Zealander Penney was told of the decision on Sunday morning, with his assistants Jason Gilmore and Chris Whitaker named as interim head coaches for the remainder of the season.

The board says its decision was taken after consultation with the chief executive Paul Doorn and the high-performance committee following five consecutive defeats, three of them record losses.

Saturday night's 46-14 defeat by the unbeaten Queensland Reds proved the final straw.

In the second season of a three-year deal, 56-year-old Penney was battling to extract consistent performances from an inexperienced squad after a host of high-profile players departed the cash-strapped organisation in recent years.

In the past two years alone, the Waratahs have lost more than 1800 Super Rugby caps in experience, including Wallabies captain Michael Hooper, playmakers Kurtley Beale, Bernard Foley and 100-plus Test forwards Sekope Kepu and Rob Simmons.

The Tahs have also endured a wretched run with injury this campaign, losing captain Jake Gordon and several other senior players.

"The Waratahs acknowledge that Penney has been coaching an inexperienced roster of players relative to the other states," the board said in a statement.

"However following match reviews, the board was not convinced there was enough significant improvement in the team to have him continue in the role."

Penney's sacking came just hours after he called for more resources and better-targeted recruiting to fast-track progress as the Waratahs face the prospect of becoming the first Australian team in 25 years of Super Rugby to endure a winless campaign.

"We need resources and we need to strategically recruit in a couple of areas so the organisation can move forward more quickly than just relying on the youthful guys to come through," Penney said after Saturday night's loss.

"There's a whole lot of issues that have culminated in what now is a very ugly-looking run of games.

"If it wasn't for the calibre of people in the organisation and the calibre of men that are in the group trying to do the jersey proud, then this would have blown up and disintegrated massively.

"No one likes it. No one is enjoying it, in terms of the results, but there's a real resolve to try to get better every week."

He insisted he wanted to stay in the job, saying from experience he believes "the worm turns" in these situations.

"I love what I'm doing," Penney said. "With the initial stages when I was brought in, it was (a question of) could I bring a young group through?

"Of course I can. I would back my record against anyone to be able to do that.

"(But) you do need to have a combination of youth surrounded by experience."

Also speaking post-match, Queensland coach Brad Thorn urged the Waratahs to "play the long game" with Penney as the Reds did with him during their rebuild.

Australian Associated Press