Nussle, a Republican, is a former chairman of the House Budget Committee. He ran for governor in 2006 but lost to Democrat Chet Culver.
Portman is the latest in a string of senior White House officials to step down. White House counselor Dan Bartlett, a longtime member of President Bush's inner circle, plans to leave the administration within the next few weeks and will be replaced by former Republican party chief Ed Gillespie.
The change at the budget office comes as Democrats in Congress and Bush have kicked off a budget fight that is expected to rage all summer, with the president threatening to use his veto to hold the line on nonmilitary spending.
Portman left the U.S. Congress, where he represented an Ohio district, in 2005 to join the Bush administration as trade representative. When Bush tapped Joshua Bolten to become his chief of staff a little more than a year ago, Portman succeeded Bolten as the budget director.
"After 14 years of public service and commuting between Washington D.C. and Ohio, the director has made the very personal decision that he would like to go back and spend time with his three teenage children and his wife," said Sean Kevelighan, spokesman for the budget office.