Thwaites is leaving the LFU board for personal reasons after 18 months of involvement, a period in which the group has been fighting for supporter representation on Leeds United’s board.
LFU was founded with the intention of buying a minority stake in Leeds but briefly looked at a majority takeover in October after an apparent offer from Massimo Cellino to buy his stake.
That proposal collapsed within days, however, with LFU claiming Cellino had withdrawn his offer and Cellino accusing LFU of telling “fairytales” about his intention to sell up.
LFU has raised money via donations from fans and said last year that its funds amounted to around £500,000.
Thwaites, a local businessman, was at the forefront of LFU’s efforts but a statement from the group said: “Today we announce the resignation of Dylan Thwaites from Leeds Fans Utd.
“Dylan has been part of Leeds Fans Utd since the start and his vision, commitment, enthusiasm and business acumen has got us where we are today.
“Dylan continues to support LFU and will work with us again in the future should we require his assistance.
“The goal of Leeds Fans Utd has not changed during this time – to get fan ownership at Leeds United. In a constantly changing situation it is our belief that we need to be ready to take advantage of opportunities as they arise.”
LFU said it would hold elections to its board later this summer.