Mti, who has been linked to corruption while he was still national correctional services commissioner, was appointed by the council following a recommendation by former mayor Danny Jordaan.
Mayor Athol Trollip, who took over in August, has on many occasions voiced his concern about what he called an irregular appointment.
Trollip has confirmed Mti tendered his resignation to the municipal and will be taking early retirement.
Mti will officially step down in May.
His short-lived tenure as head of safety and security was marred by opposition questioning his fitness for the job.
The Special Investigating Unit implicated Mti in alleged irregular tenders worth more than R1 billion when he was head of prisons.
The Democratic Alliance has unsuccessfully been pushing for the National Prosecuting Authority to charge Mti for fraud and corruption.
(Edited by Zamangwane Shange)