Washington ( CNN ) -- President Barack Obama announced Monday that White House Chief of Staff Bill Daley is stepping down and will be replaced by Office of Management and Budget Director Jack Lew . Two senior Obama aides told CNN that Daley will stay in his job through January , including the State of the Union address . The chief of staff is in charge of White House staff and operations and is a senior adviser to the president . A senior Obama campaign aide told CNN on Monday that Daley will serve as one of the co-chairs for Obama 's re-election campaign . The other co-chair will be announced in coming weeks , the aide said . `` He 's got a ton of political experience , knowledge and contacts , and we look forward to leveraging those assets and working closely together to re-elect the president this year , '' the campaign aide said of Daley , who was the campaign chairman for Al Gore 's presidential run in 2000 . No love lost between Daley , Senate Democrats . In a previously unscheduled statement Monday to reporters at the White House , Obama said Daley came to him last week and talked about stepping down to spend more time with his family . Obama asked Daley to reconsider , but Daley decided to resign and recommended Lew as his successor , the president said . `` There is no question that I 'm going to deeply miss him by my side here at the White House , '' Obama said of Daley , who became chief of staff a year ago when Rahm Emanuel resigned to run for mayor of Chicago . Daley , 63 , was chosen as chief of staff last year to bring a moderating influence to the White House in an attempt to seek a middle path with Republicans on contentious budget issues . A Chicago native , Daley was widely regarded as the force behind getting the NAFTA agreement passed through the Republican-controlled Congress when he served as Commerce secretary in the Clinton administration . With Obama now involved in election-year politics , the president has taken steps to appeal to his Democratic base , such as his recess appointment of Richard Cordray as head of a new consumer protection agency . According to a senior Obama aide , Daley told Obama last week that it was best for the president and the White House if Daley stepped aside . A top Democratic congressional aide told CNN that Daley 's relations with Democratic legislators were strained . According to the aide , congressional Democrats believed Daley did a poor job of reaching out to legislators and listening to their ideas during contentious budget and debt ceiling negotiations last year . In particular , the aide said , relations grew tense after Obama tried to cut a major deficit reduction agreement with U.S. House Speaker John Boehner and congressional Democrats learned of it by reading about it in the news media . The aide also said Senate Majority Leader Harry Reid , D-Nevada , called Obama to complain about Daley after a controversy over the scheduling of the president 's jobs speech to Congress . The speech was rescheduled after Boehner complained about the initial date requested by the White House in a dispute characterized as emblematic of dysfunction in Washington . In his resignation letter dated January 3 , Daley praised Obama 's efforts to address the nation 's long-term fiscal problems and said the president `` made Americans aware and supportive of a balanced approach '' that is needed . He also cited Obama 's determination in ending the war in Iraq and `` bringing Osama bin Laden to justice , '' as well as the president 's efforts in getting new free-trade agreements through Congress . `` I have been honored to be a small part of your administration , '' Daley 's letter said . `` It is time for me to go back to the city I love . '' According to multiple Democratic sources , Daley found it hard to break in at a White House where Obama already received advice from long-time aides . In addition , Daley was unable to get Obama to agree to staff changes that Daley thought were necessary to make the White House function better , Democratic sources said . The Democratic sources also said that Obama 's campaign focus , which positions him as champion of working Americans , made one of Daley 's roles -- improving White House relations with the business community -- a lesser priority . Lew , meanwhile , will remain in place for now to finish the 2013 budget proposal , which is due in early February , said Kenneth Baer , the Office of Management and Budget communications director . `` Whatever decision the president makes about who is to lead the agency ( after Lew departs ) , there will be a continuity of leadership at the highest levels , '' Baer said of the OMB . Lew became OMB director in November 2010 , succeeding Peter Orszag . Lew also held the post in the Clinton administration and later served as deputy secretary of state for management and resources in the Obama administration . He will be the third chief of staff under Obama , after Emanuel and Daley . In addition , Pete Rouse briefly served as interim chief of staff between Lew 's two predecessors . CNN 's Tom Cohen and Ted Barrett contributed to this report .
NEW : Democratic sources cite reasons for Daley 's decision to step down . Comment: Daley will be replaced by Jack Lew , the White House budget director . A source says Daley will remain on the job through January .