The 34-year-old model has reportedly lost her £500,000 deal with the sexy underwear brand to Alice Dellal, an unknown blonde socialite 14 years her junior.
A source said: "Everyone is stunned. Kate's shots were really well received, but bosses thought it was time to move on. They want a fresh new face and think they've found just the candidate in Alice."
Half-Brazilian Alice - who wears a nose ring - posed for a secret photo shoot to be released in September.
Kate's contract with the firm was not renewed last year amid rumours of tension between her and owner Serena Rees - but she returned for a bridal lingerie campaign this year.
This is not the first fashion snub for the British catwalk queen.
Naomi Campbell took her place for Yves Saint Laurent, while hot new model Agyness Deyn replaced her at Burberry.
ps- this is the alice chick