In his time at the helm, Mr Usher has successfully established the IDeA as the driving force behind the improvement of local government, working with councils in a supportive but critically challenging way.
It has also won a BT Vision 100 award, ranking it as 'one of the most visionary organisations in the UK', alongside easyJet, NHS Direct and the Eden Project.
Tests have revealed Mr Usher has heart disease and he will not be able to devote as much time and energy to the job as he has done in the past.
Mr Usher said: 'Setting up the IDeA from scratch has been immensely rewarding. We've recruited some of the brightest and most talented people in the business and I'm proud of our considerable achievements.
'I'm pleased the agency is now well established, its role secure and that it is likely to grow in future. I have no doubt the IDeA will go from strength to strength and I leave safe in the knowledge it will continue in the capable hands of my deputy John O'Brien and a first rate management team.'
Brian Briscoe, chief executive of the LGA, said: 'I am really grateful for all the hard work Mel has put in to establish the IDeA so successfully. He has had an inspirational effect on the improvement of local government and has been a great colleague and friend. It is sad that his health will not allow him to continue.
'He has successfully established the IDeA as the premier organisation supporting local government improvement. His personal drive and style will be missed but he has laid strong foundations for the future of the agency.'
IDeA chairman Colin Barrow said: 'We in local government often talk about obstacles rather than opportunities. Mel did the exact opposite, and accordingly realised an ambitious vision for the agency.
'The IDeA can be proud of its record of action and innovation. Mel has made an enormous contribution to local government in this country by showing how a group of talented people with a vision can make all the difference.'
Deputy executive director John O'Brien will act up until a permanent successor is appointed. He said: 'Mel has been a truly inspirational leader. He's given us an excellent platform from which to work and we will continue to move on from there.'
SOLACE director general, David Clark, said: 'The IDeA was a unique experiment to see if an industry can improve itself. Under Mel's leadership, the IDeA has transformed itself from a collection of disparate agencies into an organisation with a purpose. The experiment has been a success.
'I was part of an IDeA improvement programme which gave the authority we were visiting a unique insight into how it should work - and it also gave me an insight into how I should work myself.
'There are few greater legacies in a job than to have been able to change things and Mel has. I will be very sorry to see him go.'
Lewisham LBC chief executive Barry Quirk said: 'Mel is one of those exceptional people who looks at things and asks why they can't be done dramatically better.
'Local government has many civic entrepreneurs - people with the vision and drive to make radical changes that improve the public value of what we do. Mel personifies the civic entrepreneur for the whole of local government. His passion for creative innovation combined with a deep commitment to the values of local government have placed the agency at the heart of public service reform.'
Suffolk CC chief executive Lin Homer said: 'Mel's a one-off. He's energetic, innovative and ever so slightly quirky. Local government will be a duller place without him.'
Mr Usher will act in an advisory capacity on the recruitment of the new executive director, with the post being advertised in September.
Although he is still exploring his options, Mr Usher is expecting to retain some links with local government.
Mel Usher was chief executive of South Somerset DC for eight years before taking up his post at the IDeA. South Somerset won LGC's first ever Council of the Year Award in 1997. He has also worked at Blackburn, Wigan, West Lancashire, Tower Hamlets and Islington Councils. In 1999 Mel was awarded an OBE for services to local government.
The white paper 'Strong Local Leadership - Quality Public Services' praised the work of the IDeA and highlighted the role it saw the agency playing in the new local government landscape. It said: 'The government recognises and welcomes the significant contributions made by the IDeA's Local Government Improvement Programme and other initiatives such as IDeA Knowledge and Learning. We need to build on these.' (p49)
Over the last three and a half years, the IDeA has established a formidable reputation in local government. Its achievements include:
* the highly successful Local Government Improvement Programme. Over 130 peer reviews have been conducted with another 20 more taking place this year. Developing the notion of the 'critical friend', the peer review model has been adopted by the Audit Commission in its CPA process and is now being used in a number of European countries
* the knowledge-sharing website, IDeA Knowledge, which was launched last July and now has over 13,000 regular users
* IDeA Consulting and Performance Support which provide tailor-made support to individual local authorities. The IDeA has worked with councils of all types - high performing and low, large and small, district, county and unitary - to raise their game
* Member development programmes such as the Leadership Academy and Modern Members, which have between them trained over 2,000 members
* e-government projects such as the National Land Information Service which is speeding up the process of home buying and selling by giving land and property information at the touch of a button and the e-procurement service Marketplace, which is currently being piloted by a number of local authorities.
A customer survey conducted for the IDeA by MORI last winter found 'a high level of satisfaction with the IDeA' among officers and members. A summary of the findings is available on request. The IDeA website currently receives over 1.5 million hits a month.