AIM-listed Cello, which owns a number of market research businesses as well as creative agencies such as Farm and Leith, made the announcement to the London stock exchange today, but did not reveal any further details about the illness.
Mark Scott, the group's chief executive, will assume Steeds' executive responsibilities.
Scott will be assisted on a part-time basis by Allan Rich, one of the group's non-executive directors, who becomes acting chairman on a non-executive basis.
Cello, which owns various market research, data and direct marketing agencies, including Insight, Leapfrog, Tangible Data and Tangible Response, said it "looks forward to Kevin's return at the earliest opportunity".
Steeds is also temporarily stepping down from his chairman role at Pixel Interactive Media, the Asia-focused online and mobile ad sales company.
Douglas Khoo, an independent non-executive director at Pixel, will temporarily assume Steeds' responsibilities with immediate effect.