The news is a blow to Claydon Heeley, which has produced regular award-winning pieces of work for the newspaper over the three years that it has held the account.
The Guardian has created an in-house creative department, called Guardian Creative, to handle the business. The division is an extension of its commercial publishing offering, which launched The Guide in 1993. It will continue to work on commercial supplements and magazines as well as developing innovative ideas for the newspapers.
Marc Sands, the Guardian Newspapers marketing director, said: "We have the best in-house creative department in the newspaper industry. It makes perfect sense to widen its brief."