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"Today I am announcing that I have decided to withdraw my name from consideration to be the Department of Homeland Security Undersecretary for Intelligence and Analysis," Mudd said in a prepared statement isued by the White House.

"I know that this position will require the full cooperation with Congress and I believe that if I continue to move forward I will become a distraction to the President and his vital agenda."

Mudd thanked the president for "the honor of being considered."

White House spokesman Nick Shapiro said President Obama accepted Mudd's withdrawal "with sadness and regret."

"The President believes that Phil Mudd would have been an excellent Undersecretary for Intelligence and Analysis but understands his personal decision and the choice he has made. It is with sadness and regret that the President accepted Phil's withdrawal from consideration as Phil once again demonstrated his duty to country above all things," Shapiro said in a statement.

The White House also released a statement from DHS Assistant Secretary of Public Affairs Sean Smith, who said "Phil Mudd would have been an outstanding Undersecretary and we are disappointed by his decision but accept it."

Smith said the Office of Intelligence and Analysis will continue to be led "on an interim basis" by Bart Johnson.

Mudd was going to be questioned sharply by the Senate Government Affairs and Homeland Security Committee on his relationship to the CIA's counterterrorism policies and pre-war intelligence on Iraq, committee sources said.