Tracy Henke, an assistant secretary of homeland security appointed by President George W Bush, has been assailed by Republican and Democratic senators from New York and reportedly also lost the White House's confidence.
Henke, 37, is resigning effective October 31 and going into the private sector, Homeland Security Secretary Michael Chertoff said in a statement.
Henke has headed the sprawling agency's office of grants and training since January.
Her June decision to slash grants for New York and the capital city prompted ridicule and outraged leaders of both main US parties, especially because she proposed higher funding for her home state of Missouri.
Bush appointed Henke during a Congressional recess, but the Senate never voted to confirm her, meaning her term would have expired when the legislature's current session concludes at the end of this year.
With an annual budget of more than 40 billion dollars, Homeland Security was created after the September 11, 2001 attacks on the US, in a historic bureaucratic overhaul to better protect the nation against further terrorism.
