The lender said no one would lose their job as a result of the changes.
The valuation company has around 200 surveyors working for it, who are being transferred to E.surv.
Colleys claimed to be one of the largest valuation and surveying businesses in the UK.
The business was established in 1999 and owned by Halifax before the bank merged with Lloyds in 2009.
In 2014 Colleys said it managed more than 430,000 instructions.
A spokeswoman for Lloyds said: “After conducting a detailed review and thorough selection process, we identified that the best course of action for the future of our business was to outsource all of this service and work in partnership with one provider, having previously used a mix of in-house and outsourced service.
“E.surv will provide a market-leading retail valuation capability to meet the future needs of our mortgage customers, leveraging the benefits of its advanced platform, capability and expertise.”
Colleys respected within the market
Brokers said Colleys had been among the better players in the surveyor market.
Andrew Montlake, director at broker Coreco, said: “I have always had the greatest respect for Colleys as a firm of surveyors who really understand the nature of service and communication.
“They are always open in their discussions around property and their reasoning behind their valuations, which unfortunately cannot be said about some other valuers who prefer to hide behind high walls.”
Nick Morrey, product technical manager at John Charcol, added: “To outsource to E.surv is quite a surprise.
“It is a shame since Colleys has a really good reputation in the broking industry that went hand in hand with Halifax – especially as they are one of the few surveyors whom brokers can approach to ask about the viability of a property before they are instructed.
“In addition to this I would say they are pretty quick, especially as they could be instructed directly from their mortgage application system – a real bonus to the in-house advisers sitting in front of applicants keen to get the process underway.
“Things move on, but it is a shame that another long-standing relationship has come to an end.”