Bush's selection of Wolfowitz in 2005 for the bank post had stunned Europeans and some other countries. Europeans were upset that Bush would tap someone so closely associated with the Iraq war. After the pay controversy erupted a month ago, Europeans led the charge for Wolfowitz to resign.

Wolfowitz waged a vigorous battle to save his job and maintained he had acted in good faith. He was all but forced out, however, by the finding of a special bank panel that he violated conflict-of-interest rules in his handling of Riza's pay package.

Until near the end, the Bush administration had professed support for Wolfowitz. But in a shift on Tuesday, the White House indicated for the first time it was open to his departure. It was the same day Wolfowitz made a last-ditch plea to save his job before the board.

After days of negotiations, Wolfowitz got what he wanted - an acknowledgment from the bank's board that he did not bear sole responsibility for the conflict-of-interest furor surrounding his handling of the pay package.

"He assured us that he acted ethically and in good faith in what he believed were the best interests of the institution, and we accept that," the board said in its announcement of Wolfowitz's resignation.

The bank board said it was clear that a number of people had erred in reviewing Riza's pay package. The board's statement made no mention of any financial arrangements related to Wolfowitz's departure, nor did it speak to Riza's future.

For his part, Wolfowitz said he was pleased that the board "accepted my assurance that I acted ethically and in good faith in what I believed were the best interests of the institution, including protecting the rights of a valued staff member."

Now, he said, it was in the best interest of the board that its mission "be carried forward under new leadership."

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