White House Press Secretary Sean Spicer said in a statement that Mr Comey has been "terminated and removed from office." Mr Trump was said to have acted on "clear recommendations" from Attorney General Jeff Sessions and Deputy Attorney General Rod Rosenstein, in a move that has shocked Washington.
However, Democratic Senators were quick to point out the constitutional crisis that has been created by Mr Trump removing a man in charge of investigating him. Senator Dick Durbin said on the Senate floor that the firing of Mr Comey raises questions "as to whether the Russian interference in the last presidential election... will also be investigated by the FBI."
Mr Durbin called on the White House to clarify whether the investigation will continue, adding that any "attempt to stop or undermine the FBI probe would raise grave constitutional issues".
Mr Trump's statement indicated that a search for a new director of the FBI "will begin immediately."
In Mr Trump's letter formally informing Mr Comey of his termination, he was appreciative of Mr Comey "informing [him] on three separate occasions" that the president was not under investigation by the agency.
However, Mr Trump "concur[s] with the judgement of the Department of Justice (DOJ) that you are not able to effectively lead the Bureau."
"It is essential we find new leadership...that restores public trust and confidence," Mr Trump said.
In addition to the Senate and FBI investigations, the House Intelligence Committee is also conducting one. Democratic Representative Eric Swallwell, the ranking member on the committee, said that Mr Comey's firing "should send a chill down the spine of every American, no matter who they voted for."
“The administration of justice must remain free of political influence, and President Trump has just leaped over that line," Mr Swalwell said.
Calls from several members of Congress, including Republican Senator John McCain, about having an independent, bipartisan commission to conduct the Russia investigation have been amplified in the wake of Mr Comey's dismissal.
Mr McCain expressed his "disappointment" in Mr Trump's decision, calling Mr Comey a "man of honor and integrity" in a statement.
Several Democrats have also called the firing “Nixonian," referring to the Saturday Night Massacre – when former President Richard Nixon dismissed Archibald Cox, the special prosecutor in the Watergate scandal. That night, the attorney general and deputy attorney general resigned in protest to the firing of Mr Cox.
"Today's action by President Trump completely obliterates any semblance of an independent investigation into Russian efforts to influence our election, and places our nation on the verge of a constitutional crisis," said Representative John Conyers, senior Democrat on the House Judiciary Committee.
Mr Conyers and other Democrats have echoed Mr McCain's calls for an independent commission or a special prosecutor to investigate Russian influence in the 2016 election - with Chuck Shumer, the top-ranking Democrat in the Senate calling for a "fearless" special prosecutor to take on the Trump-Russia probe, wondering whether the firing of Mr Comey meant the various Russia probes were "getting too close to home for the President".
News that Mr Comey made inaccurate statements to the Senate, while under oath, surfaced recently and could also point to another possible reason for his dismissal.
Mr Comey made headlines in July 2016 with a letter to Congress detailing the end of the FBI investigation into Hillary Clinton's use of a private server to send classified emails while she was serving as Secretary of State. A further letter in October of that year - mere days before the presidential election -said further emails would be investigated, while accusing her top aide, Huma Abedin, of sending classified information in a similar manner.
Mr Comey said in front of the Senate Intelligence Committee last week that Ms Abedin “forwarded hundreds and thousands of emails” that contained classified information to the laptop of husband and erstwhile Congressman Anthony Weiner.
On Tuesday, the FBI said in a two-page letter to the Senate Judiciary Committee that only “a small number” of the thousands of emails found on the laptop had been forwarded there while most had simply been backed up from electronic devices. Most of the email chains on the laptop containing classified information were not the result of forwarding, the FBI said.
Robert Cattanach, a partner specialising in cybersecurity at the law firm Dorsey & Whitney and a former trial lawyer at the DOJ, told The Independent that perjury is “tough to prove."
“It requires a knowing misstatement of fact,” he said.
Mr Cattanach said any letter sent by the FBI to correct the record would have needed to explain “why [Mr Comey] said what he said,” because if it was just an honest mistake Mr Comey did not actual commit perjury in the legal sense.
There is no apparent language in the FBI letter indicating why Mr Comey made the error in his testimony on Ms Abedin's email.
In his memo to the Attorney General about the dismissal, Mr Rosenstein called the way Mr Comey handled the entire Clinton email investigation "wrong."
He wrote that Mr Comey undermined the agency and entire DOJ when he said he had to make a decision whether to "speak" about the Clinton email investigation or "conceal" it.
"When federal agents and prosecutors quietly open a criminal investigation, we are not concealing anything," Mr Rosenstein wrote. It has been a longstanding policy of the DOJ not to publicly comment on investigations with "non-public" information.
Mr Cattanach said that "if Comey had not promised Congress that he would ‘get back to them if anything changed’ he would almost certainly have been safe in relying on standard FBI policy." Instead Mr Comey put himself in a "lose-lose" situation, following the letter sent in July and that led to the second letter in October that said a number of further emails from Ms Clinton would be investigated.
In his testimony on 3 May, Mr Comey said knowing he had an impact on the US election because he spoke about the Clinton investigation and not the one regarding Russian ties to the Trump team, made him "nauseous."
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