By mistakenly I created a user as Salesforce Licensed User. Now I need to delete/change the license, which i tried change but couldn't. Is there a way to change since we cannot delete a user?
That is not possible. Please refer to this article
Try logging a case.
You can't convert a Chatter Only license or any other standard Salesforce licenses to a Chatter Free license. You can, however, deactivate the Chatter Only user and create a new Chatter Free user with a unique username. The history remains with the Chatter Only user.