Describing Mitchell as having taken on "the toughest job imaginable," Obama paid tribute to the veteran diplomat who had "worked grueling hours to advance the interests of the United States and the cause of peace."

"His deep commitment to resolving conflict and advancing democracy has contributed immeasurably to the goal of two states living side by side in peace and security," the president said in a statement.

Mitchell gave no reason for deciding to quit, saying only he had always intended to serve just two years when he was appointed by Obama in January 2009. His resignation will be effective from Friday, May 20.

"I strongly support your vision of comprehensive peace in the Middle East and thank you for giving me the opportunity to be part of your administration," Mitchell said in his resignation letter to Obama.

He will be replaced by a former ambassador to Jordan, David Hale, who is deputy assistant secretary of state and will serve as acting envoy to the Middle East, the president said.

"As a nation, we remain committed to peace in the Middle East and to building on George's hard work and progress toward achieving this goal," Obama added.

The surprise resignation by the seasoned negotiator comes only days ahead of Obama's highly-anticipated speech on the pro-democracy uprisings sweeping Arab nations on Thursday.

Obama tapped Mitchell as Middle East envoy at the start of his new administration in 2009, hoping the former US senator could bring his renowned negotiating skills to the Arab-Israeli conflict.

Mitchell, who managed against all odds to broker the historic Good Friday agreement in Northern Ireland in 1998 ending decades of bitter conflict, has been indefatigable in his efforts in the Middle East.

"I believe firmly that there's no such thing as conflict that can't be ended," he said in a speech to foreign policy experts in Washington in May last year.

"They're created, conducted, and sustained by human beings. They can be ended by human beings. No matter how hateful, no matter how hurtful, peace can prevail."

But two years on and despite numerous trips and closed-door talks, Israel and the Palestinians are no closer to achieving a long-coveted peace accord.

Both sides have shown themselves unwilling to compromise on some of the thorniest issues at the heart of the conflict, such as Israel's continued settlement building in the occupied Palestinian lands and the final status of Jerusalem, claimed by both as their capital.

Washington's last bid to relaunch direct peace talks in September 2010 failed less than a month later, when Israel refused to extend a moratorium on settlement building in the West Bank.

The political landscape has also been muddied after the secular Fatah party of Palestinian president Mahmud Abbas signed a surprise reconciliation unity deal with the Islamist movement Hamas last week.

Israeli Prime Minister Benjamin Netanyahu has denounced the deal as a "hard blow to the peace process."

Mitchell, who under former president Bill Clinton led a fact-finding mission to the Middle East in 2000, resigned just as the peace process is to be pushed back up the agenda in Washington.

Obama will meet with Jordan's King Abdullah II at the White House on Tuesday and then give his long-awaited speech on the Arab uprisings at the State Department on Thursday, an official said.

The US president will then hold talks with Netanyahu at the White House on May 20, with the Israeli leader set to address a joint session of the US Congress on May 24.

Netanyahu said in mid-April that he would use his speech to spell out his plan for forging a lasting peace with the Palestinians.

The prime minister has been waging a diplomatic offensive to counter Palestinian plans to seek a unilateral recognition of statehood at the United Nations.

Obama's speech will come amid global reverberations over the killing by US special forces of Al-Qaeda leader Osama bin Laden in his Pakistani compound, and the pro-democracy uprisings in the Arab world.

"The president obviously has some important things to say about how he views the upheaval and how he has approached the US response to events in the region," Carney said.

"I am sure it will be fairly sweeping and comprehensive," Carney said.

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