Owner Tony Sage warned contracts would be torn up if crisis talks failed to solve the dispute between Edwards and mainly skipper Jacob Burns, which centred around the coach's perceived favouritism of his two sons, Ryan and Cameron.
Either Edwards or the 35-year-old Burns were expected to be forced out, with the pair's relationship untenable.
But player power has won out in Western Australia, with Edwards paying the ultimate price, just 10 games into his three-year deal.
Kenny Lowe, a former Glory assistant, is the early frontrunner to lead the club on an interim basis, while Chris Coyne and Graham Normanton are some of the names being considered.
Ex-Glory coach Mich d'Avray, who guided the club to back-to-back NSL champions in 2003 and 2004, is also a candidate, according to reports.
A bitter feud between Perth's coaching staff and senior players had been brewing before the situation came to the fore following Friday's 2-0 loss to Melbourne Victory.
Burns, who was an unused substitute at AAMI Park, and a number of team-mates were involved in a heated exchange with Edwards after the defeat.
Perth players, in particular Burns, had accused Edwards of favouring his two sons, after Ryan was selected ahead of the veteran midfielder against Victory, while Cameron was a second-half substitute.
Edwards, who did not attend the post-match conference, admitted his relationship with Burns had reached breaking point following the team's arrival in Perth last week.
"I think there's definitely a rift with Jacob Burns and myself, that's for sure," Edwards said.
"There were a few things said behind closed doors and that's something we've got to address internally.
"Since then it's been a bit testy, and because he wasn't re-introduced into the team after winning last week, it sort of caused a bit of a problem."
Edwards' future became even more clouded on Saturday after Sage conceded some players had grown disillusioned with the arrival of Ryan, on loan from Championship outfit Reading and Cameron.
"That is one of the major problems… It's a perception problem." Sage said.
"When he did that at the time I said to him it would be a perception problem and your kids are going to be the one to suffer on this because if we don't win every single game you are going to get criticised.
"What we have to do is find out his reasoning for not giving some of the other players a chance…Find out why he hasn't he played (Adrian) Zahra more or why hasn't he played (Isaka) Cernak at all this season."