WASHINGTON (Reuters) - President-elect Barack Obama has chosen former White House chief of staff Leon Panetta to lead the CIA, which has been widely criticized for harsh interrogation of terrorism suspects, Democratic officials said on Monday.

Former Clinton White House chief of staff Leon Panetta gestures during a break in a televised interview with Larry King for the CNN program "Larry King Live" March 19, 1998 in Los Angeles. REUTERS/Rose Prouser/Files

The surprise pick of Panetta for Central Intelligence Agency director was one of the last major nominations for the incoming Obama administration, which takes over from President George W. Bush on January 20.

Panetta has relatively little experience in national security matters, though he did participate in daily intelligence briefings with President Bill Clinton when he served as Clinton’s chief of staff between 1994 and 1997.

He is best known as a budget expert who tamed deficits in the White House and during a prior 16-year stint in Congress.

He was a member of the Iraq Study Group, a bipartisan commission that was charged with assessing a way to end the Iraq war. Its recommendations for a phased troop withdrawal were largely ignored by the Bush administration, which chose to increase the U.S. military presence there instead.

Intelligence experts said Panetta’s knowledge of the inner workings of government, and his strong bipartisan reputation for fairness, would prove valuable.

“It was a surprise, but I think he will prove to be a valuable pick,” said a source with close ties to U.S. intelligence.

Panetta would succeed Michael Hayden, who has been criticized by some Democrats and human rights groups for his defense of Bush administration counterterrorism tactics. Hayden has sought to restore stability at the spy agency.

CIA CONTROVERSIES

The CIA has been at the center of a number of major controversies during Bush’s presidency, beginning with the intelligence failures before the September 11, 2001, attacks and then the faulty prewar intelligence about Iraq’s weapons programs.

The agency also has been criticized for the use of waterboarding, or simulated drowning, and other harsh interrogation methods on al Qaeda suspects, for the secret transfer of captured terrorism suspects to countries known to use torture and for the use of secret prisons overseas for high-level captives.

Obama has vowed to “put a clear end to torture” and restore a balance between security and constitutional protections.

“The CIA still is in a politically fragile moment,” said Princeton professor Julian Zelizer. “Bringing a politically skilled person into this position can help the CIA revitalize its political standing.”

The position of CIA director is not as influential as it used to be after the creation in 2004 of a Director of National Intelligence to oversee all U.S. intelligence agencies.

Sources say Obama has picked retired Navy Adm. Dennis Blair to fill that position.

After leaving the White House, Panetta has directed a public policy center at California State University, Monterey and served in other positions within California’s state university system. He has also sat on a number of corporate and nonprofit boards.

Panetta’s choice could appease some liberal activists who have said that Obama’s other picks for key national-security posts are too hawkish and insufficiently antiwar.

Obama has picked retired Marine Gen. James Jones for his national security adviser and has asked current Defense Secretary Robert Gates to remain in charge at the Pentagon.