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In the first major shakeup among President Barack Obama's senior staff, White House Counsel Greg Craig announced his resignation Friday.

WASHINGTON (CNN) - In the first major shakeup among President Barack Obama's senior staff, White House Counsel Greg Craig announced his resignation Friday.

The resignation will take effect on January 3, according to a letter sent by Craig to Obama.

Craig is being pushed out in favor of veteran Democratic lawyer Bob Bauer because of a dispute over plans to close the U.S. military prison in Cuba, CNN learned Thursday.

"I want to tell you how proud I am of all that your legal team has accomplished on your behalf," Craig wrote in the letter. "It has been a busy first year (for the administration), and I feel very lucky to have been part of it."

Earlier: 'I have no plans to leave,' Craig says

The move was announced while the president was in Japan at the start a four-nation tour of Asia.

Craig declined to comment and hung up when reached by CNN late Thursday evening.

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Tokyo (CNN) – In the first major shakeup among President Barack Obama's senior staff, White House Counsel Greg Craig is being pushed out in favor of veteran Democratic lawyer Bob Bauer because of a dispute over plans to close the U.S. military prison in Cuba, CNN has learned.

The move will be announced by the White House in the coming days, a senior administration official and a senior Democratic source confirmed. The sources said it could be announced as early as Friday while the president will be in Japan starting a four-nation tour of Asia, which would make it likely the staff change will be overshadowed by other events.

Craig declined to comment and hung up when reached by CNN late Thursday evening.

Bauer is the husband of Anita Dunn, the outgoing White House communications director. Dunn, who recently led a so-called "war" on Fox News, announced earlier this week that she is leaving her White House post, a long-anticipated move that was not connected to the media battle.

Democratic officials said Craig was ousted because of frustration among senior White House aides over his handling of the plans to close the prison at Guantanamo Bay. As the White House's top lawyer, Craig was pivotal in advising Obama to sign an executive order during his first week in office promising to shut the prison by the end of January 2010.

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White House counsel Greg Craig, shown here with the president on Inauguration Day, says he has 'no plans to leave whatsoever.'

WASHINGTON (CNN) – White House Counsel Greg Craig is trying to put to rest rumors that his time as the president’s top in-house lawyer is coming to an untimely end, according to a report by the National Law Journal.

"'I have no plans to leave whatsoever,'" Craig reportedly told the legal publication. "'The rumors that I'm about to leave are false. The reports that I'm about to leave are wrong. I have no plans to leave.'"

As the Obama administration has begun to send signals that it may not meet its own one-year deadline for closing the U.S. detention facility at Guantanamo Bay, Cuba, a deadline that that the new administration set for itself with much fanfare on President Obama’s first full day in office, Craig has found himself increasingly subject to rumors that he is headed out of the White House.

In the interview with the National Law Journal, Craig denied a September 25 report by the Washington Post that he had played a leading role in developing the administration’s initial plan to close the controversial facility by late January 2010.

To address the setbacks it encountered in closing the facility, “the administration has shifted its leadership team on the issue,” the Post’s September 25 report said. “White House Counsel Gregory B. Craig, who initially guided the effort to close the prison and who was an advocate of setting the deadline, is no longer in charge of the project,” the Post reported, citing two senior Obama administration officials.

But Craig says the Post’s report is inaccurate.
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(CNN) - Three officials close to the transition say prominent Washington lawyer Greg Craig is under strong consideration to be named White House counsel, the powerful post of the president's top lawyer.

Craig first gained prominence representing President Clinton in the Senate impeachment trial, but he endorsed Barack Obama over Hillary Clinton in the Democratic primaries and later played a key role in Obama's vice presidential vetting process.

"He's a very strong possibility," said one person close to the transition, who added Craig is "highly regarded" and trusted for his discretion by Obama.

A second official close to the transition was more bullish, calling it "all but a done deal" that Craig will be selected. A third official called Craig a "strong" contender at the top of the short list for the post.

Craig did not return a call seeking comment.