Babble won only seven matches in 29 games in charge of the club.
Hoffenheim are third from bottom in the Bundesliga table and have by far the worst defensive record in the division – conceding 36 goals in just 15 games.
Hoffenheim lost 4-1 at home to Werder Bremen at the weekend and club manager Andreas Mueller had hinted a change.
"We will talk calmly and without pressure, but also analyse the situation ruthlessly. I cannot answer whether we will continue with Markus. The situation is precarious," he said.
Former Kaiserlslautern coach Marco Kurz and German assistant manager Hansi Flick have already been linked with the position.
Hoffenheim's Under 23 coach Frank Kramer will temporarily take charge of the senior team.