Veteran US Government hawk Richard Perle has resigned as chairman of a top Pentagon policy group.
Perle denies any conflict of interest with Global Crossing
Mr Perle's move comes amid controversy over his dealings with the bankrupt telecommunications group, Global Crossing.
US Defence Secretary Donald Rumsfeld said in a statement he had accepted Mr Perle's resignation as chairman from the Defence Policy Board, which advises him on defence issues, but had asked him to remain a board member.
"As I cannot quickly or easily quell criticism of me based on errors of fact concerning my activities, the least I can do under these circumstances is to ask you to accept my resignation," Mr Perle said in a letter to Mr Rumsfeld.
Mr Perle, a leading advocate of the war on Iraq, said he had decided to resign because he feared that accusations of conflict of interest regarding Global Crossing could distract from Mr Rumsfeld's handling of the Iraqi conflict.
'Prince of Darkness'
The controversy centres on Mr Perle's deal with Global Crossing to win US Government approval of its proposed partial sale to Asian investors, from which Mr Perle stood to make hundreds of thousands of dollars.
The Pentagon had objected to the sale because it would have meant that Global Crossing's invaluable optic fibre technology would be owned by a company with strong links to China.
Mr Perle has denied any wrongdoing over the issue.
However, he said he was advising Global Crossing he would
not accept compensation from the pending sale and added that fees for his past services would be donated to the families of US forces killed or injured in Iraq, the Associated Press news agency reported.
A former assistant secretary of defence under Ronald Reagan, Mr Perle was nicknamed the "Prince of Darkness" for his opposition to arms control.
Mr Perle had also not only argued for the need to go to war with Iraq, he had strongly suggested that the Iraqis would put up minimal resistance.
BBC correspondent Jon Leyne says that his days of power in Washington now appear to be over.