A top White House aide resigned today for his role in Air Force One's $328,835 photo-opportunity flyover above New York City that sparked panic and flashbacks to the September 11 terrorist attacks.

The sight of the huge passenger jet and an F-16 fighter plane flying past the Statue of Liberty and the tall office buildings in lower Manhattan's financial district sent panicked office workers streaming into the streets on 27 April. Obama said it would not happen again.

Louis Caldera said the controversy had made it impossible for him to effectively lead the White House military office. "Moreover, it has become a distraction in the important work you are doing as president," Caldera said in his resignation letter to Barack Obama.

Caldera's office approved the photo-op, which cost $35,000 in fuel alone for the plane and two jet fighter escorts. The US air force estimated the photo shoot cost taxpayers $328,835.

White House officials said the flight was designed to update the official photo of the plane, known as Air Force One when the president is aboard. The White House released a photo of the blue-and-white plane high above the Statue of Liberty, with New Jersey in the background.

The White House released the report today via e-mail, with a short written statement from White House press secretary Robert Gibbs. There was no statement about the matter from Obama, who last month declared the embarrassment a "mistake" and vowed it would not be repeated.

Gibbs said Obama has ordered a review of how the White House military office is set up, and how it reports to the White House and the air force.

That review, to be conducted by Jim Messina, the deputy chief of staff, and Robert Gates, the defence secretary, will also offer recommendations to Obama designed to ensure that such an incident will not happen again, Gibbs said.

Caldera, a former US army secretary, has headed the office that coordinates presidential travel on air force jets.

When Obama appointed Caldera to the job during the presidential transition, the then president-elect hailed Caldera as having a CV that was second-to-none. Obama said then: "I know he'll bring to the White House the same dedication and integrity that have earned him the highest praise in every post."

His resignation takes effect on 22 May, but he is finished at the White House military office now not just as director, but in any part of the office's work. He said he will use the two weeks of his employment to complete the necessary steps to leave the White House.