Sandoval's replacement, Javier Ponce, will probably be sworn in later on Wednesday, reports said.
'Foreign powers' claim
Correa alleged last week that Ecuador's intelligence services were infiltrated and controlled by the US Central Intelligence Agency (CIA) and said they should be investigated for disloyalty.
"We are putting a stop to that and will make sure Ecuadorean
intelligence services ... don't work for foreign powers, and, through
them, for those who attack our country," he said last week.
Senior military leaders had requested a meeting with Correa to discuss his demand that Ecuador's intelligence services be investigated for disloyalty.
The armed forces command said it wanted a meeting in order to "maintain a direct and transparent dialogue" and "avoid putting at risk the nation's security and stability".
Correa was also apparently angered that Ecuador's military intelligence apparently advised Colombian officials, but not him, about an Ecuadorean man's contacts with Colombia's Farc rebel group.
The man died in a controversial cross-border raid on a camp run by the Revolutionary Armed Forces of Colombia (Farc) in Ecuador on March 1 that also killed Raul Reyes, a senior Farc leader, and several others.
The attack led to both Ecuador and ally Venezuela breaking diplomatic relations with Colombia, a key US ally, and sending troops to their Colombia borders.
Sandoval is said to have made recent statements apparently contradicting Correa's policies towards Colombia.
After the raid, he said the army planned to send reinforcements to the
border to keep out rebels, however Correa had said Colombia should be responsible for keeping the rebels from crossing into Ecuador.