Yahoo's chief executive Carol Bartz had decided to eliminate Williams' role in recent days, according to the newspaper, which cited people briefed on the move. The report credited one of those sources with saying that Williams had been laid off.
The move comes days after Yahoo, based in Sunnyvale, California, said it would lay off nearly 700 workers, or 5 percent of its workforce.
Since Bartz took the reins in January, Yahoo has pruned various products and properties to cut costs and focus on fundamentals as it seeks to revive growth in a tough economy and with fierce competition from Google Inc
Earlier this week, Yahoo said it was shutting down GeoCities, a free service that hosts personal home pages for consumers. Last week, the company said it was shutting down Jumpcut, an online service for editing videos.
Yahoo's shares closed up 1.24 percent at $14.73 on Friday.