Larry Summers, the Clinton-era treasury secretary who returned to government as Barack Obama's chief economic adviser, is to leave the administration before the end of the year.
The move, announced last night after 24 hours of rumours in Washington, gives the White House the chance to signal a fresh start on economic policy, after voters expressed disappointment at the sluggish pace of the recovery and corporate leaders complained that the administration was pursuing an anti-business agenda.
The President is considering tapping a corporate sector chief executive as a replacement, sources said.
"I will always be grateful that at a time of great peril for our country a man of Larry's brilliance, experience and judgement was willing to answer the call and lead our economic team," Mr Obama said.
Mr Summers will return to a teaching role at Harvard University, where he is an economics professor and former president. In the White House, he had been regarded as a moderate voice, arguing against populist measures against the banking industry.
After the midterm elections in November, only one member of Mr Obama's original economic team will remain, the Summers protégé Tim Geithner, the Treasury Secretary.
Mr Obama had stoked speculation of an imminent reshuffle on Monday when he said of his economic team: "This is tough, the work that they do. They've been at it for two years, and they're going to have a whole range of decisions about family that will factor into this as well."