The former Tottenham and Argentina player had been in the role since the start of the season but was ousted, according to Betar, because he refused to include an Israeli assistant on his coaching staff.
The 54-year-old will be replaced by former club goalkeeper Yossi Mizrahi, who has been coaching Ashdod.
In his short stewardship Ardiles, who won 63 caps with Argentina and the World Cup in 1978, claimed three wins, a draw and one defeat.
However Ardiles' record and style of game did not escape the wrath of the press, or the club's supporters, who have given the club a reputation for being right-wing and staunchly anti-Arab.
The team's players also complained they found Ardiles' instructions difficult to understand.
Betar is owned by Arcady Gaydamak, a billionaire with Russian origins whose son also owns English club Portsmouth.
An international warrant has been issued by France for the arrest of Gaydamek in connection with the sale of arms to Angola.