Democratic Party sources say U.S. President-elect Barack Obama has picked Arizona Governor Janet Napolitano to lead the Department of Homeland Security.

Arizona Gov. Janet Napolitano, 13 Nov. 2008

Napolitano presides over a southwest border state and has been praised for her handling of immigration and homeland security issues.  The governor's Web site says Napolitano is a national voice in calling for the federal government to take responsibility for securing the nation's borders.

Sources say the Democratic governor was selected pending the results of a vetting process.

The Cabinet negotiations are expected to continue as Mr. Obama holds private meetings in the midwestern U.S. city of Chicago Thursday.

In Washington, incoming White House chief of staff Rahm Emanuel is to meet with Congressional Republican leaders to discuss how best to work together.  Emanuel has said Mr. Obama plans to govern in a bipartisan fashion during his term in office.  

In other Cabinet selections, Democratic officials say Mr. Obama's pick for the Department of Health and Human Services, former Senate Majority Leader Tom Daschle, has accepted the job.

The Obama transition team has not confirmed the report, but did say the South Dakota Democrat will lead a team of health policy advisors.

Separately, there is still speculation that Mr. Obama's former Democratic rival for the White House, Senator Hillary Clinton, will join his Cabinet as secretary of state. 

Reports say her husband, former President Bill Clinton, will submit to an extensive ethics review if Senator Clinton is nominated as the top U.S. diplomat.

Mr. Obama's transition team has also announced the appointment of Gregory Craig as White House counsel.  Craig served as special council and lawyer to former President Clinton during Mr. Clinton's impeachment proceedings.