WASHINGTON (CNN) — Embattled State Department Inspector General Howard Krongard announced his resignation Friday, a department spokesman said.

"We thank him for his dedication to public service and wish him well in his future endeavors," said Gonzo Gallegos, director the State Department's office of press relations.

Krongard came under scrutiny over his handling of investigations into State Department contracts in Iraq and Afghanistan.

The House Oversight and Government Affairs Committee, led by California Democrat Henry Waxman, is investigating allegations that Krongard interfered with investigations and blocked fraud probes.

Waxman said that Krongard's oversight of construction of the nearly $600 million U.S. Embassy in Baghdad — which remains unfinished — was conducted with "reckless incompetence," and that he refused to pursue allegations of fraud and labor trafficking by contractor First Kuwaiti.

The Waxman committee also said Krongard's office had threatened staff members with dismissal if they cooperated with congressional investigators, which Krongard denied.

Another concern surfaced during a hearing last month before the committee when it was revealed that Krongard's brother, former CIA No. 3 Alvin "Buzzy" Krongard, was an advisor to security contractor Blackwater.

That North Carolina-based company has won more than $800 million in State Department contracts to provide security for U.S. diplomats in Iraq — a job that has come under intense scrutiny since the September killings of 17 Iraqis by Blackwater contractors in Baghdad.

The company has denied wrongdoing, but the shootings have prompted Iraq's government to roll back a U.S. order giving security contractors immunity from prosecution in Iraqi courts.

During the Nov. 14 hearing, Krongard first denied that his brother had any role with the company, but reversed himself when confronted with evidence that Alvin Krongard had attended an advisory meeting for Blackwater that very week.

Howard Krongard immediately recused himself from any decisions involving Blackwater, and his brother resigned his advisory post two days later.

Howard Krongard maintains that his brother had told him he was not going to accept a position on the advisory board, but Alvin Krongard disputes that.

Waxman, who had been talking of bringing Krongard and his brother back for more questioning, released a brief statement Friday.

"Mr. Krongard's decision removes an enormous distraction from the inspector general's office and will allow the office to focus on its important oversight responsibilities," he said. "The committee will certainly take this new development into account."

Earlier, the inspector general's private lawyer had written Waxman asking that the rift between the brothers not be the focus of another hearing.

"There is no legislative purpose to be gained by publicly pitting two brothers against each other," the letter said.

Krongard's State Department office released a list of his various appearances before the House Oversight Committee, other letters to Congress and his resignation letter to President Bush.

"I have said publicly, in the various materials listed below, everything I have to say on these matters," he said in a statement released with the documents. "I have nothing further to say at this time."

In the three-page letter to Bush, Krongard said he was leaving with concerns over what he called "the grave threat to public service posed by the current rancor and distrust between and among the political parties, the legislative and executive branches of government, the media and various interest groups.

"I fear that if the current environment in Washington persists, too many
of the most qualified prospective public servants across the country will be dissuaded from serving," he said.

Krongard also told the president he was proud of establishing the first State Department inspector general office outside Washington. Krongard said the new branch of the office in the Mideast — set for opening next month in Jordan — will be able to more closely monitor what is happening in Afghanistan and Iraq.

— CNN's Charley Keyes contributed to this report