Washington (CNN) -- President Obama announced Friday that retired Marine Gen. Jim Jones is stepping down as White House national security adviser later this month.
Jones will be replaced by his current deputy, Tom Donilon.
"Jim has always been a steady voice" on key national security issues, Obama said in a Rose Garden appearance with Jones and Donilon.
"I am extraordinarily grateful" for his "sacrifice for his country."
The move had been long anticipated because senior officials say Jones never quite clicked with other key members of Obama's inner circle. Jones was not an active part of the Obama presidential campaign, and two people close to Jones told CNN that when he accepted the appointment in 2009, he agreed to stay on for only two years.
The turnover at the sensitive post comes after a slew of other top Obama aides have already left the White House or signaled their plans to leave the administration either later this year or in early 2011 -- including Chief of Staff Rahm Emanuel, senior adviser David Axelrod and top economic aides Larry Summers and Christina Romer.
The choice of Donilon, a well-known quantity inside the West Wing, signals that even during a time of turnover, Obama prefers to replenish the ranks with people from his inner circle. Given that approach, top Democratic advisers privately said, it is highly unlikely that Obama will go far outside the circle when he eventually settles on a permanent chief of staff despite expected pressure on the president to widen the circle after the midterm elections.
Continuity has reigned so far in the musical chairs of staff moves. Romer was replaced as chairwoman of the White House Council of Economic Advisers by White House economic aide Austan Goolsbee, while Axelrod is expected to be replaced next year by someone already in the fold, such as press secretary Robert Gibbs or former Obama campaign manager David Plouffe.
Axelrod is expected to move to Chicago but stay on as an informal adviser for Obama's expected 2012 re-election effort.
Earlier this month, Emanuel was replaced as chief of staff on a temporary basis by longtime Obama aide Pete Rouse. Donilon had been rumored to be a possible permanent successor to Emanuel, but two sources familiar with the conversation said that Donilon recently told the president he wanted to take himself out of the running for chief of staff and instead stay at the National Security Council.
Donilon, the sources said, knew that Jones was likely to leave soon and that he was expected to move up.
Jones' exit brings to a close a somewhat tumultuous time as national security adviser after he clashed with Emanuel and other top White House officials -- in part because of a hands-off style that did not sit well with administration officials expecting a more take-charge leader at a time of wars in Afghanistan and Iraq as well as a slew of other thorny national security challenges.
Jones' allies note, in his defense, that he is a highly respected former Marine commandant and NATO's supreme allied commander in Europe. These allies note that Obama, a commander in chief who came to the job without military experience, benefited from the credibility within the military that Jones brought to the table.
Jones will now be replaced by Donilon, who is widely hailed in Democratic circles as having a sharp foreign policy mind.
Donilon was chief of staff to Clinton administration Secretary of State Warren Christopher.
But Donilon has clashed with some in the Obama orbit as well. Journalist Bob Woodward, in his new book, "Obama's Wars," suggests there has been tension between Donilon and Defense Secretary Robert Gates.
"Gates felt that Donilon did not understand the military or treat its senior leadership with sufficient respect," Woodward wrote. "The secretary later told Jones that Donilon would be a 'disaster' as Obama's national security adviser."
But a senior Defense Department official told CNN that "the Woodward characterization is just way out of date" because Gates and Donilon now have a "strong working relationship" within the administration.
Nevertheless, the defense official acknowledged "they had some issues" during the sometimes contentious internal debate last fall that resulted in the president crafting a new policy toward Afghanistan and Pakistan.
The policy resulted in Obama announcing a surge of 30,000 more U.S. troops being sent to Afghanistan.
"They have long since been overcome," the senior defense official said of the tensions.
"I have thoroughly enjoyed working with Gen. Jones," Gates told reporters Friday.
"I have and have had a very productive and very good working relationship with Tom Donilon, contrary to what you may have read. And I look forward to continuing to work with him."
Donilon's appointment, however, may ruffle some other feathers within the administration. Several of Obama's foreign policy advisers during the campaign, who were angling for the national security adviser job after the 2008 election, were also considered contenders to replace Jones this time and might have been considered more inspired choices than Donilon.
Susan Rice, U.S. ambassador to the United Nations and former assistant secretary for African affairs and scholar at the Brookings Institution, was one of Obama's most public foreign policy voices during the campaign. She is said to be disappointed with the New York job because she was lobbying hard to be national security adviser after Obama's election victory. Aides have said she would have wanted to move back to Washington to take the post if Jones left.
Deputy Secretary of State James Steinberg, who was deputy national security adviser in the Clinton administration, also wanted the job before it was given to Jones. Instead, he was sent to the State Department, and there has been speculation he wants out, hoping to land a top staff job at the White House.
CNN's Elise Labott and Alan Silverleib contributed to this report.