The 34-year-old Frenchman arrived on a one-year deal in the summer after being released by Tottenham but has failed to make an impact at the Stadium of Light.
Manager Martin O'Neill told the Shields Gazette: "We have told Louis he is free to speak to other clubs and to leave if he can fix himself up somewhere."
He added: "We have come to an agreement whereby we will cancel the remainder of his contract, shake hands and go our separate ways."
O'Neill added that a move to South Africa was a possibility for the former Fulham, Manchester United and Everton striker.
- Sports & Recreation
- Shields Gazette