He has also resigned as a director with immediate effect. Deputy chairman Jeremy Hamer, who is also a former chairman of the group, has been appointed non-executive chairman.
"This is a sad day for Inter Link Foods, but Alwin's priority must be his health. Under his leadership the company became one of the leading AIM success stories and his legacy must now be built on by his successors," said Hamer.
Last month Alwin warned that the cake manufacturer was facing a testing six months after it posted a 47.8% decrease in half-year pre-tax profit, which it blamed on warm weather at the end of October.