Barack Obama's choice for health secretary, former South Dakota senator Tom Daschle, at a hearing in January 2008. (Pablo Martinez Monsivais/Associated Press)

Former Democratic senator Tom Daschle, one of Barack Obama's closest advisers, withdrew his nomination to be the new U.S. president's secretary of health and human services on Tuesday.

Daschle has been under scrutiny since it was disclosed that he failed to pay more than $120,000 US in taxes. He has also faced criticism for close ties with health-care interests, including paid speaking engagements.

Daschle was not pushed aside and made the decision to step way on his own, said Robert Gibbs, the White House press secretary.

Daschle said he's withdrawing because he would not have been able to operate in the position "with the full faith of Congress and the American people."

In a brief letter sent to Obama, Daschle wrote that he refused to "be a distraction" from the new president's drive for health-care reform.

Nancy Killefer, who was to be the first White House chief performance officer, overseeing budget and spending reform, also withdrew her candidacy on Tuesday. She said she didn't want her failure to submit payroll taxes to be a distraction for the president.

The District of Columbia government had filed a $946.69 tax lien on Killefer's home in 2005 for failure to pay unemployment compensation tax on household help. She resolved the tax error five months after the lien was filed.

Administration officials had refused to say whether her tax problems extended beyond that one issue.

In a statement released Tuesday, Obama said he accepted the withdrawal "with sadness and regret."

"Tom made a mistake, which he openly acknowledged. He has not excused it, nor do I," Obama said. "But that mistake, and this decision, cannot diminish the many contributions Tom has made to this country, from his years in the military to his decades of public service."

In an later interview on NBC, the president said, "It's important for this administration to send a message that there aren't two sets of rules — you know, one for prominent people and one for ordinary folks who have to pay their taxes."

The South Dakota Democrat was a senior figure in the Obama campaign throughout the lengthy presidential race and recently wrote a book about how to improve health care.

He is the latest Obama-appointed figure to withdraw from consideration for a key position.

Last month, New Mexico Gov. Bill Richardson withdrew his nomination as commerce secretary amid a grand jury investigation into a state contract awarded to his political donors.

With files from the Associated Press