In April this year he denied a report that he called Trump an "idiot". Vice President Mike Pence's chief of staff, Nick Ayers, is a possible contender, the source said.
Kelly answered a narrow set of questions from investigators in recent months after White House lawyers objected to Mueller's initial request to do the interview earlier this summer, the sources said.
The expected departure would end a tumultuous tenure for Kelly, who was brought on to bring order to the White House but whose time as chief of staff has often been marked by the same infighting and controversy that has largely defined Trump's presidency from its beginning. But the strained relationship between the president and Kelly, 68, a retired marine corps general and former homeland security secretary, has been widely chronicled.
The president began Friday by attacking the soon-to-be published report by special counsel Robert Mueller. Lights are off in Kelly's office this morning, per a senior admin official.
Kelly has seen his status as chief of staff diminished in recent months, with the President circumventing numerous policies and protocols the retired Marine Corps general put in place when he entered the West Wing a year ago.
Donald Trump calls Rex Tillerson 'dumb as a rock' after critical interview
He said Tillerson "didn't have the mental capacity needed for the job" while praising Tillerson's replacement, Mike Pompeo. That's not really a Tillerson insult , except that getting fired via Twitter was seen by many as pretty insulting.
White House officials believed Kelly was close to resigning after he got into a heated shouting match with national security adviser John Bolton in October.
Trump has long admired Kelly for his military valour, but his lack of political experience and interest in campaign strategy has made him an imperfect fit leading the staff of a president who lives and breathes politics.
The officials confirmed the decision Friday on condition of anonymity because it had not been announced.
"She's very talented, very smart, very quick, and I think she's going to be respected by all", Trump said.
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