The UK MoD bought nearly 200 of the protected patrol vehicles for units in Afghanistan and Iraq, rushing the first ones into service in early 2007 to replace Snatch Land Rovers in which several British troops had been killed by roadside bombs.
A MoD spokesman confirmed the intention to withdraw the vehicle in a May 1 statement.
"Since its introduction to theatre, the evolving threat from larger improvised explosive devices on operations has led to a requirement for more medium and heavy capability vehicles to withstand these devices," the spokesman said.
"Following the delivery of Mastiff 2, Ridgback and vehicles from the protected mobility package announced in October 2008, we intend to withdraw Vector from operations in Afghanistan.
"This will be a phased withdrawal and will not lead to any capability gap."
It is understood that many of the six-wheel-drive Vectors are already sitting in vehicle parks, unused by troops who have moved to the more heavily protected Force Protection Cougar vehicle, known in British Army service as the Mastiff.
Vector has attracted increasing criticism in the media for its vulnerability to roadside bombs.
The vehicle has also suffered unreliable front hubs and other technical problems.
BAE Systems fixed that problem at its own expense.
Defence Secretary John Hutton called the Vector the least successful of the armoured vehicles purchased by the MoD under the urgent operational requirements (UOR) procurement process.
BAE Systems, which acquired Vector builder Pinzgauer as part of a wider purchase of Armor Holding in the US, still has to deliver about 20 vehicles it is assembling at its Newcastle factory in north-eastern England.