The 32 year-old, who played 177 times for Posh in two spells scoring 45 goals, is now a free agent and able to join another club.
Tomlin starred in the Posh promotion team of 2010-11 and in a successful Championship campaign the following season. He came back to Posh on loan from Cardiff in the 2018-9 season.
Tomlin cost Cardiff £3.2 million when joining from Bristol City in July, 2017, but played just 57 times for the club scoring 11 goals.
The attacking midfielder has not played competitively for almost 12 months. He last appeared in a 3-2 defeat at QPR on October 31, 2020.
It’s unlikely Posh will seek to sign Tomlin for a third time.