However, despite making the PFA Division 3 Team of the Year for a second successive season, the 24-year-old has had a difficult time at Glanford Park this term.
Manager Brian Laws said: "Lee was not enjoying his football and you can see that so there was no point offering a new deal for an unhappy player and it is in his best interests as well as ours that he goes elsewhere.
"I know for a fact that he will and I would be surprised if he hasn't got anything lined up. I would like to thank him for his efforts while at the club."
The news of the attacking midfielder's exit could interest City, where Hodges would link up with former West Ham youth team friend Gary Alexander. However, Hodges may be looking to move to a side in a higher division.
Meanwhile, Scunny have also released Pepper, Bradshaw, Thom, Anderson and Bennion.
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