Delete Custom Azure Images

Within the old Azure portal, navigate to Virtual Machines, Images; select the image and then select the Delete action, which will give you the option to also delete the associated VHD file.

Use the PowerShell command Remove-AzureVMImage with the -DeleteVHD option to also remove the associated VHD; for example, Remove-AzureVMImage -ImageName MyTestImage -DeleteVHD.

You can also use the REST call to delete images; this is documented on the Microsoft Azure "Delete VM Image" page.