Defence Secretary Chuck Hagel announced Monday he is stepping down, leaving under pressure following a rocky tenure in which he has struggled to break through the White House's insular team of national security advisers.

During a White House ceremony, Obama said he and Hagel had determined it was an "appropriate time for him to complete his service."

Hagel is the first senior Obama adviser to leave the administration following the sweeping losses for the president's party in the midterm elections. It also comes as the president's national security team has been battered by crises including the rise of Islamic State militants in Iraq and Syria and Russia's provocations in Ukraine.

The president praised Hagel, a Republican who grew close to Obama while they both served in the Senate, as an "exemplary defence secretary" who forged a strong bond with troops stationed around the world. Hagel, who served in the Vietnam War, is the first enlisted combat veteran to serve as defence secretary.

"Chuck Hagel has devoted himself to our national security and our men and women in uniform across six decades," Obama said.

Among the leading contenders to replace Hagel is Michele Flournoy, who served as the Pentagon's policy chief for the first three years of Obama's presidency. Flournoy, who would be the first woman to head the Pentagon, is now chief executive officer of the Center for a New American Security, a think tank that she co-founded.

Former Defence Undersecretary for Policy Michele Flournoy is being mentioned as a possible replacement as defence secretary. (Yuri Gripas/Reuters)

Others mentioned as possible replacements include Ash Carter, the former deputy defence secretary, and Robert Work, who currently holds that post.

The timing of Hagel's departure sets up a potential confirmation fight in the Senate. Republicans, who will take control of the body next month, have been deeply critical of the president's foreign policy.

While Obama has sought to consolidate foreign policy decision-making within the White House, advisers have privately worried about Hagel's ability to communicate the administration's positions. There have also been concerns that Hagel wasn't proactive or engaged in Cabinet meetings and other national security discussions.

In what appeared to be an effort to refute that criticism, Obama said Monday that Hagel had always "given it to me straight" during their private conversations in the Oval Office.

Hagel has had his own frustrations with the White House. In recent weeks, he sent a letter to national security adviser Susan Rice in which he said Obama needed to articulate a clearer view of the administration's approach to dealing with Syrian President Bashar Assad. The letter is said to have angered White House officials.

Sen. John McCain, the Arizona Republican who is poised to become chairman of Armed Services Committee, said Hagel has been "frustrated with aspects of the administration's national security policy and decision-making process."

"His predecessors have spoken about the excessive micromanagement they faced from the White House and how that made it more difficult to do their jobs successfully," said McCain, referring to public criticism from Robert Gates and Leon Panetta. "Chuck's situation was no different."

Hagel submitted his resignation letter to Obama on Monday morning. The 68-year-old said he had agreed to remain in office until a successor is confirmed by the Senate.

Hagel's aides assert that he is leaving at an appropriate juncture, after having brought to fruition this year several major initiatives on nuclear weapons management and as well as reforms to the military justice system and to the military health system. But his departure also coincides with a period of great uncertainty over the course of the administration's campaign to defeat the Islamic State group, as well as worry over Russia's actions in Ukraine.

Hagel served as senator from Nebraska and became a critic of U.S. involvement in Iraq. After Obama nominated him to succeed Leon Panetta as defence secretary in his second term, Hagel struggled through a confirmation hearing that raised early concerns about him within the White House.

Just last week Hagel was asked about speculation he might be leaving during an interview on the Charlie Rose show. He was asked whether he was concerned.

"No. First of all, I serve at the pleasure of the president," Hagel said. "I'm immensely grateful for the opportunity I've had the last two years to work every day for the country and for the men and women who serve this country. I don't get up in the morning and worry about my job. It's not unusual by the way, to change teams at different times."

Hagel was the first enlisted combat military veteran to become secretary of defence. He served in the Vietnam War and received two Purple Hearts.

Hagel forged a strong personal relationship with Obama in the Senate and they made several overseas trips together, including the high-profile visit Obama made in the final months before the 2008 presidential campaign. He carved out a reputation as an independent thinker and blunt speaker, and Obama said he came to admire his courage and willingness to speak his mind.