Senior officials say President Bush plans to name National Security Advisor Condoleezza Rice to replace Colin Powell as secretary of state.
Ms. Rice is known to be one of President Bush's most trusted aides and a strong supporter of the Iraq war.
Sources say her deputy, Stephen Hadley, will replace her as national security advisor and that the president could make both announcements as early as Tuesday.
Mr. Powell, seen as a moderate within the Bush administration, resigned Monday. He is expected to step down sometime in January, after his replacement has been approved by the U.S. Senate.
Mr. Powell says he submitted his resignation in a letter to President Bush last Friday.
"It has been my great honor and privilege," he said, "to have been, once again, given the opportunity to serve my nation, and I will always treasure the four years I have spent with President Bush and the wonderful men and women of the Department of State."
Mr. Powell says he will stay on until his successor is confirmed by the Senate. He is expected to leave sometime in the next two months.
The news is not a total surprise. The 67-year-old former chairman of the joint chiefs of staff was widely expected to step down before the start of a second Bush term.
Colin Powell has been one of the most popular administration officials. He was seen as a moderate voice and skilled diplomat.