Fallon was only handed the briefs four months ago. The £22 million broadband account moved from AMV, while BT Yahoo! was previously handled by Clemmow Hornby Inge.
Fallon picked up the accounts when BT mapped out its advertising strategy for 2004, reassigning several of its key accounts and bolstering its £97 million annual spend.
However, the agency is understood to have encountered problems cracking the brief.
It unveiled its debut campaign for BT Yahoo! Anytime in April. The TV, print and radio ads dramatised the terrible treatment people have to put up with in life, in contrast with the service standards at BT Yahoo!
The campaign introduced the endline: "You wouldn't accept it in life. Why accept it online?"
Fallon will remain on the BT roster. It is not yet clear whether the agency will be compensated for the loss of the two accounts.