Striker Smith, who has been playing in defence and midfield of late, returned to Nyewood Lane in the summer from Dulwich Hamlet but struggled to find his best form largely due to injuries.
Now the club hierarchy and the popular Smith have mutually agreed to part ways and the former Portsmouth youngster will rest up before plotting his return to the game over the summer.
Bognor manager Robbie Blake paid tribute to Smith — who bagged eight goals in 28 appearances this term — after watching his side draw 2-2 with Sussex rivals Whitehawk at the MKM Arena on Tuesday. Goals from Jasper Mather and Lucas Pattenden for the hosts and Kai Jennings and Charlie Harris for the visitors meant it was honours even on the night.
Blake said: “Dan has shown nothing but a big commitment with us but in truth he has struggled for a lot of the season with injury. Ironically, he played really well in central defence in the 1-0 win at Wingate & Finchley on Saturday but then a specialist told him he need complete rest to get over a groin injury so he wouldn’t have been available for the rest of the season.
“We talked it through and both parties agreed it was the way forward. We wish Dan all the very best as he considers the next chapter of his career.”