Housing and Urban Development Secretary Alphonso Jackson is resigning Monday, according to a government official.
Jackson is under criminal investigation at the same time the housing industry is in a crisis so serious that it has imperiled the nation's credit markets, placing the country on the brink of what some economists predict will be a major recession.
The department has scheduled a 10 a.m. announcement Monday. The government official, who spoke on condition of anonymity ahead of the announcement, did not disclose the reason for Jackson's resignation.
Jackson's plans to resign were first reported on the Web site of the Wall Street Journal.
A week ago, Democratic Sens. Patty Murray of Washington state and Christopher Dodd of Connecticut said that Jackson's problems represented a "worsening distraction" at HUD at a time when the nation needs a credible housing secretary who is beyond suspicion.
Jackson, 62, has been fending off allegations of cronyism and favoritism involving HUD contractors for the past two years.
The FBI has been examining the ties between Jackson and a friend who was paid $392,000 by Jackson's department as a construction manager in New Orleans after Hurricane Katrina.
When the existence of the criminal probe was revealed in October, the White House said President Bush supports Jackson and that Jackson "expects that the investigation will clearly establish that he did nothing improper or unethical."
In another controversy, the housing authority in Philadelphia has filed a lawsuit alleging that Jackson tried to punish the agency for nixing a deal involving music-producer-turned-developer Kenny Gamble, a friend of Jackson.
At a congressional hearing this month, Jackson repeatedly refused to answer questions about the Philadelphia redevelopment deal.
Last year, the inspector general at Jackson's department found what it called "some problematic instances" involving HUD contracts and grants, including Jackson's opposition to money for a contractor whose executives donated exclusively to Democratic candidates.
The HUD IG found that Jackson blocked the money "for a significant period of time." Jackson blamed his own aides for the delay.
In 2006, Jackson triggered the IG inquiry when he said publicly that he revoked a contract because the applicant who thanked him said he did not like President Bush.
Jackson later told the IG's investigators that "I lied" when he made the remark about taking back the contract.