The 64-year-old will remain in charge for the final two matches of the Premier League season, but the Baggies also confirm they were trying to tie their boss down to a new contract
Hodgson will remain in charge at the Hawthorns until the end of the season, but ever since the FA confirmed last week that they had approached the former Switzerland coach, it appeared likely that West Brom would soon have to begin their hunt.
Peace admits he is disappointed that the Baggies now find themselves in this position, but he was quick to add he understands Hodgson’s decision to take the England job.
"The board will now concentrate on the important task of appointing a new head coach to continue our project as we prepare for a third successive season in the Barclays Premier League," Peace told reporters.
"We did not want Roy to leave and he will be a tough act to follow.
"But I want to reassure our supporters that we will do everything possible to identify and appoint the right head coach for this football club."
According to Peace, the FA’s approach came at the worst possible time as he confirmed the club were currently negotiating a new contract for Hodgson, however he thanked the experienced coach for his efforts and wished him luck with England.
He continued: "We would have liked Roy to sign a new contract, which was in the process of negotiation, and remain as our head coach.
"But we understand Roy's desire to take the England job and he will leave us after the Arsenal game on May 13 with our best wishes.
"Of course, with Euro 2012 around the corner, we appreciate that some of Roy's focus over the next 12 days will be on England matters.
"But we are delighted he will be seeing the season out with us. With the help of the coaching staff, he will prepare the team in his usual, meticulous manner as we finish what has already been a successful season."