President Bush has named Mr Paul Bremer, a former ambassador who was head of the State Department's counterterrorism office during the Reagan administration, to be his special envoy to Iraq.
Mr Bremer (61) will become the civilian administrator of Iraq, overseeing all political and reconstruction efforts and reporting directly to Defense Secretary Mr Donald Rumsfeld.
Gen Tommy Franks, commander of all US-led forces in the region, "will maintain command over coalition military personnel in the theater," the White House said in a statement.
Mr Bremer, a longtime diplomat and associate of former Secretary of State Mr Henry Kissinger, will supervise Mr Jay Garner, who is currently the top-ranking US civilian in Iraq.
Mr Garner welcomed the appointment, saying that when he arrives in Iraq next week, Mr Bremer "will get more involved in the political process. I'm doing all of it and don't want to do all of it."
Mr Bremer spent 23 years in the diplomatic corps before retiring as the State Department's ambassador-at-large for counter-terrorism in 1989.
Agencies