The MCBD chief executive, Jeremy Miles, explained: "In this economic climate, it is naturally a decision we took very seriously. However, our creative product and our people's morale must come first."
The decision follows the appointment of Jo Field as Dyson's marketing director, and the departure of the group marketing director, Rebecca Trentham. She will continue working for Dyson as a consultant, and will work with Field to find a new agency for the UK account.
It is thought Fallon will be invited to pitch for the UK business, as the network was recently hired to work on the US account, worth $30 million.
Media for the account in the US is handled by MediaCom, and the UK account will stay with Walker Media.
MCBD was hired in August 2000 as the company ramped up its marketing activity and drafted in the Abbott Mead Vickers BBDO founder David Abbott to work on the first ad campaign, which broke in 2001.
The agency worked on print advertising and produced a television campaign to launch Dyson's two-drum washing machine and multi-cylcone vacuum cleaner.
The company makes four different types of vacuum cleaners which sell in 25 countries. It recently transferred production from the UK to facilities in Malaysia to reduce costs.