Susan Rice, the combative US ambassador to the United Nations, has withdrawn her name for consideration as the next secretary of state.
Hillary Clinton steps down next year, and it had been widely speculated that Ms Rice would be President Obama’s favoured choice to replace her.
But she has become embroiled in a charged debate over the death of the US ambassador to Libya, Christopher Stevens, in September, and several Republican senators said they would seek to block her appointment as America’s top diplomat.
In a letter to President Obama, Ms Rice asked that he no longer consider her for the position that would need to be confirmed by the Senate. She said: "If nominated, I am now convinced that the confirmation process would be lengthy, disruptive and costly - to you and to our most pressing national and international priorities.
"That trade-off is simply not worth it to our country." She added: "The position of secretary of state should never be politicised."
'Strength of character'
President Obama released a statement lauding Ms Rice for her service, but regretting the political debate surrounding her possible nomination. His statement said: "While I deeply regret the unfair and misleading attacks on Susan Rice in recent weeks, her decision demonstrates the strength of her character, and an admirable commitment to rise above the politics of the moment to put our national interests first."
Ms Rice made several high profile television appearances in the aftermath of the September 11 attack on the US consulate in Benghazi.
She claimed forcefully that the attack was a spontaneous eruption of anger in response to an anti-Islamic film produced in America, and that it was copying another violent protest that day in Cairo.
"While I deeply regret the unfair and misleading attacks on Susan Rice in recent weeks, her decision demonstrates the strength of her character, and an admirable commitment to rise above the politics of the moment to put our national interests first." President Barack Obama
However, it emerged that the attack that killed Ambassador Chris Stevens and three other Americans was carried out by a terrorist group affiliated with Al Qaeda, and that there was no protest outside the consulate.
Senior Republicans – including former presidential candidate Senator John McCain - accused Ms Rice of misleading the American public and of obscuring the facts over a serious terrorist incident.
Senator Lindsay Graham, another critic of Ms Rice, released a statement saying he respected Ambassador Rice's decision. "President Obama has many talented people to choose from to serve as our next secretary of state," he said. "When it comes to Benghazi I am determined to find out what happened - before, during, and after the attack. Unfortunately, the White House and other agencies are stonewalling when it comes to providing the relevant information. I find this unacceptable."
Ambassador Rice's departure from the race to replace Hillary Clinton leaves former presidential candidate John Kerry as the favourite. Senator Kerry is the chair of the Senate foreign relations committee and is reported to have expressed a keen interest in the job.
Ms Rice will remain as the US ambassador to the UN, a post she has held since 2009.