ABC News said Bush was expected to nominate Adm. William Fallon to replace Gen. John Abizaid as the head of U.S. Central Command, which is in charge of U.S. military operations in Iraq and Afghanistan.

And, Lt. Gen. David Petraeus was expected to become the top ground commander in Iraq, replacing Gen. George Casey, ABC said, citing unnamed officials.

But there is little expectation that changing faces will mean a radical shift in policy called for by some opposition Democrats, who took control of the U.S. Congress on Thursday after an election dominated by the Iraq debate.

Bush is still giving top consideration to a short-term increase in U.S. troops to Baghdad and is expected to outline his plans in a speech next week. Asked what the theme would be, spokesman Tony Snow said: "Victory."

Democratic leader Nancy Pelosi, who on Thursday became first woman speaker of the U.S. House of Representatives, said November elections that brought her party to power in the U.S. Congress meant Americans wanted a change of direction.

"Shortly, President Bush will address the nation on the subject of Iraq," she said in her inaugural speech. "It is the responsibility of the president to articulate a new plan for Iraq that makes it clear to the Iraqis that they must defend their own streets and their own security, a plan that promotes stability in the region and a plan that allows us to responsibly redeploy our troops."

The Pentagon declined to comment on the ABC report.

Fallon currently is the top U.S. military commander in the Pacific. The move would place a Navy admiral in control of two land wars.

Replacing Abizaid and Casey and giving Khalilzad a new job would wrap up a virtually complete change of top U.S. officials responsible for the prosecuting the war and dealing directly with the American-backed Iraqi government in Baghdad.

Khalilzad, who had also served as ambassador to Afghanistan during Bush's first term, would replace John Bolton, who left the U.N. post last week.

This follows the departure of former Defense Secretary Donald Rumsfeld, who was replaced with former CIA chief Robert Gates.

US media reports say Mr Bush will also name Admiral William Fallon, the top US commander in the Pacific, as the new head of Central Command, which covers Afghanistan as well as Iraq.

The choice of a naval commander for Centcom could signal growing concern over Iran - any move against Tehran would rely heavily on ship-based missiles and carrier-based aircraft.

As part of his new approach, Mr Bush is set to go against the recommendations of the Baker-Hamilton Iraq Study Group and send more troops to Iraq.

An increase of 30,000 has been widely predicted, with 9,000 of those going to Baghdad, a city wracked by suicide car bombings, sectarian assassinations and kidnappings. The US currently has around 140,000 troops in Iraq.

The commanders to be replaced - General George Casey in Iraq and General John Abizaid at Centcom - have voiced scepticism about an increase in troop numbers, instead wanting to focus on training Iraqi forces.

Iraqi leaders fear that an influx of US troops could inflame tensions because of the widespread Iraqi resentment of the US military presence.

In a meeting with Mr Bush in Jordan in November, Iraq's prime minister, Nuri al-Maliki, presented a plan for US troops to retreat to the periphery of Baghdad to fight Sunni insurgents, leaving security in the capital to the Shia-dominated government.

In a major reshuffle of the US foreign policy and national security teams, Ryan Crocker, currently the ambassador to Pakistan, is expected to replace Zalmay Khalilzad as the ambassador to Iraq.

Mr Khalilzad is set to replace John Bolton at the UN, while John Negroponte will leave his post as the director of US national intelligence to become Condoleezza Rice's deputy at the state department.

However, it is the appointment of Lt Gen Petraeus - a believer in avoiding heavy-handed tactics in order to win hearts and minds - that will be most closely watched.

Supporters including the retired army general Barry McCaffrey speak glowingly of Lt Gen Petraeus, who led the 101st Airborne Division in northern Iraq in the 2003 invasion.

"A guy like Petraeus is so ferociously creative and brilliant, sometimes that makes the buttoned-down senior military leadership nervous," Gen McCaffrey said.

Lt Gen Petraeus has a PhD from Princeton University, where he wrote a dissertation on lessons the US army learned from Vietnam. In his current job, he oversaw the rewriting of the army and Marine counter-insurgency field manual.

Issued last month, the document argues that, while killing insurgents matters, it is even more vital to win the support of the population. It also advocates moving soldiers out of large, isolated bases and putting them among the population.

Under generals Abizaid and Casey, US troops would conduct operations in dangerous Baghdad neighbourhoods but would then leave, allowing insurgents to move back in.

Gen Petraeus's tactics worked to good effect in Mosul and northern Iraq, but his detractors say he won a short-term peace at the expense of allowing insurgents to organise themselves.

The change is likely to have ramifications for policy on Iraq, where Mr Negroponte was US ambassador between 2004 and 2005. Word of the switch came as Mr Bush finalised new strategy on Iraq, including a "surge" of 20,000 or more troops in Iraq, mainly to restore order in Baghdad.

It also fills a top State Department post that has remained embarrassingly vacant since July, when Robert Zoellick resigned to take a job on Wall Street.

Even at age 67, Mr. Negroponte longed to be back in the thick of policymaking, they said. But he knew it was the one role he was barred from playing as long as he remained the nation's top intelligence chief, whose role is to step into the Oval Office each morning as a neutral, impartial adviser on the threats lurking around the globe.

It was because of this, officials said, that he agreed to do something generally unheard of in a city obsessed with the bureaucratic totem pole: trade a cabinet-level job for a subcabinet post as deputy secretary of state, a job that essentially requires him to handle tasks that Condoleezza Rice would rather not deal with.

President Bush nominated him for the post today, and Mr. Negroponte said, "It will be a great privilege for me to come home to the department where I began my career and rejoin a community of colleagues whose work is so important."

To succeed Mr. Negroponte, Mr. Bush, as expected, named a retired admiral, Mike McConnell, who has had extensive experience in the collection and analysis of intelligence.

"He served as director of the National Security Agency in the 1990's," Mr. Bush said. "He was the intelligence officer for the chairman of the Joint Chiefs of Staff during the liberation of Kuwait in Operation Desert Storm."

Although he has been a private consultant for the last decade, Mr. McConnell said he had stayed in touch with intelligence agencies and issues.

His work, he said, "has allowed me to stay focused on national security and intelligence communities as a strategist and as a consultant. Therefore, in many respects, I never left."

Mr. Negroponte leaves his office at Bolling Air Force Base after only 19 months and with mixed reviews. The base is the home of a new intelligence bureaucracy created to solve the problems laid bare after the Sept. 11 attacks, but Mr. Negroponte barely had time to get it running. All over Washington on Thursday, there were questions about whether Mr. Negroponte was there long enough to lay the foundations of real change and whether his transfer suggested that the Bush administration was less committed than it claimed to be to an intelligence overhaul that President Bush had billed as the most significant restructuring of American spy agencies in half a century.

Senior administration officials said it was Mr. Bush who personally asked Mr. Negroponte to take on the diplomatic post sometime last month. It was the second time in two years that Mr. Bush had turned to Mr. Negroponte to fill a critical job: Mr. Negroponte became the director of national intelligence only after several other candidates had turned down the job. This time around, Ms. Rice had requested over the summer that Mr. Negroponte become her deputy. But the decision languished for months as the White House sought an adequate replacement for the spy chief, and as Mr. Negroponte vacillated between remaining at the helm of an intelligence community that numbered roughly 100,000 people and a return to the State Department, in the shadow of the administration's most visible international figure.

Senior administration officials said that Ms. Rice wanted Mr. Negroponte to focus on China and North Korea, which have been among his focuses in the intelligence post, and on Iraq, a country he knows particularly well.

Mr. Negroponte has also served as ambassador to the United Nations, Mexico, the Philippines and Honduras, in a Foreign Service career that spanned more than three decades. A senior administration official who was involved in discussions about his nomination said that Ms. Rice regarded him as a foreign policy moderate who could help fill the big voids left by the departure of Robert B. Zoellick, who stepped down as deputy secretary last summer, and Philip D. Zelikow, who left the job of State Department counselor last month.

Ms. Rice would continue to play a central role in Iraq policy, the official said, but she has also made it clear that she wants to devote more time to a broader diplomatic initiative aimed at Middle East peace.

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John E. McLaughlin, a former director of central intelligence who is a friend of Mr. Negroponte, said that he managed to make the transition from career Foreign Service officer to the intelligence arena with little difficulty, but that Mr. Negroponte was now returning to the world where he felt most at ease.

Mr. McLaughlin said he believed that Mr. Negroponte's familiarity with the latest intelligence from Iraq would help to bring a "realistic" view of the situation there as the administration works to develop a new strategy.

But other intelligence experts expressed concern about what Mr. Negroponte's departure might mean to the office he helped to establish. "My major concern about this appointment is not about the State Department, but what happens at the D.N.I. office," said Lee H. Hamilton, who served as co-chairman of both the 9/11 commission and the Iraq Study Group. "The future of that office and the concept of intelligence-sharing is on the line."

Top Congressional officials responded angrily to the news of Mr. Negroponte's departure.

"I think he walked off the job, and I don't like it," said Senator John D. Rockefeller IV of West Virginia, the new chairman of the Senate Intelligence Committee.

Just as Mr. Negroponte is leaving his post, his office is finishing a major National Intelligence Estimate on Iraq's chances of surviving as a unified, independent country - a review that was commissioned only after a Congressional request over the summer, on a problem that Mr. Negroponte will have to help manage in his new post.
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"He came into it after just a year in Iraq, and someone without a strong background in intelligence, and I think he is leaving awfully early, given the importance of getting this right," said Robert Hutchings, the senior diplomat in residence at the Woodrow Wilson School of Public and International Affairs at Princeton, who once headed the National Intelligence Council.

"I think it is quite irresponsible," he said.

Mr. Hutchings said the departure would compound "three or four years of nonstop turmoil" within American intelligence agencies.

Bush administration officials noted several successes during Mr. Negroponte's tenure, most significant the creation and progress of the National Counterterrorism Center. Terrorism experts have credited the center with fusing information from across the intelligence community to understand better the global terrorism threat.

But as he assembled a staff of more than 1,500 people, he was criticized for simply adding another layer to a bureaucracy he was assigned to streamline. But some intelligence experts said that the criticism was unfair, and that the real blame rested with Congress for passing convoluted legislation that made bureaucratic bloat at the director of national intelligence office inevitable. Some critics say that the job of spy czar was never necessary to begin with. Some of those whom the White House first approached to take the job nearly two years ago - including Robert M. Gates, the newly installed secretary of defense - were deeply skeptical about whether that structure would work.

The White House spokesman, Tony Snow, said that President Bush was "very impressed" with the job Mr. Negroponte had done.

One of the greatest difficulties of Mr. Negroponte's position has been trying to wrest control over multibillion dollar spy satellites and other gadgetry from the Pentagon, which historically had been in charge of 80 percent of the nation's intelligence budget.

One of the top priorities of the former defense secretary, Donald H. Rumsfeld, was to expand the Pentagon's role in intelligence gathering, and some members of Congress say that Mr. Negroponte was not aggressive enough in bringing the Pentagon's intelligence budget more under his control.

Some intelligence experts believe that Mr. Gates is likely to be less territorial than Mr. Rumsfeld was about the Pentagon's intelligence functions, and may even be eager to cede some of the Pentagon's authority to the new intelligence chief. Others said that the job of corralling 16 sometimes dysfunctional intelligence agencies is an often thankless task, and one where it is difficult to have a noticeable impact. Mr. Negroponte is said by associates to have grown particularly weary of clashes with members of Congress.

"I think it's pretty telling that both Bob Gates and John Negroponte prefer jobs trying to bail us out of Iraq to the job of trying to fix U.S. intelligence," said Amy Zegart, a professor at the University of California at Los Angeles and an expert in intelligence overhaul.

"Fallon, who is in the Navy, is currently head of Pacific Command; he will be overseeing two ground wars, so the appointment is highly unusual," ABC reports.

According to a Kansas City Star article published December 24, "Commanders have been skeptical of the value of increasing troops. The decision represents a reversal for Casey, the highest-ranking officer in Iraq. Casey and Gen. John P. Abizaid, the top commander in the Middle East, have long resisted adding troops in Iraq,

David Petraeus will replace General George Casey, commander of US forces in Iraq. Casey originally opposed the President's plan to add troops in Iraq, arguing it could delay "the development of Iraqi security forces and increase anger at the United States in the Arab world."

The LA Times recently reported that Abizaid's departure could clear the way for a more aggressive strategy in Iraq.

Excerpts from LA Times article:

Abizaid's planned departure clears the way for new Defense Secretary Robert M. Gates to recommend his own commander, a decision current and former Defense officials say is nearly as important as the new administration strategy expected to be unveiled by Bush in January.

These officials said Gates faces a clear choice between generals who have agreed with Abizaid's push to quickly hand over security responsibilities to Iraqi forces and a small but increasingly influential coterie of officers backing a more aggressive U.S.-led counterinsurgency campaign.

According to Defense officials, Abizaid submitted his retirement documents just over a month ago, shortly before Donald H. Rumsfeld was pushed out as Defense secretary. One recently retired Army general said Abizaid had wanted to retire earlier but that Rumsfeld blocked the move, insisting his war commanders stay in place.

"Going to war isn't like having a regular job," said the retired general, who, like the others, spoke on condition of anonymity because Abizaid's plans had not been made public. "It's extremely stressful, it's heavily responsible. I can understand why he'd want to retire."

Brooks told agency workers in a statement, "This is not a decision that I would have preferred ... (but) I accept the decision and you need to do likewise."

He characterized the demand for his resignation as "based on the principle of accountability that should govern all public service."

Brooks was reprimanded in June for failing to report to Bodman a security breach of computers at an agency facility in Albuquerque, N.M., that resulted in the theft of files containing Social Security numbers and other personal data for 1,500 workers.

The theft did not become generally known, nor was Bodman made aware of it, for eight months.

Last fall, security at Los Alamos came into question anew. During a drug raid, authorities found classified nuclear-related documents at the home of a woman with top secret clearance who worked at the lab.

That security breach was especially troubling, the department's internal watchdog said, because tens of millions of dollars had been spent to upgrade computer security at Los Alamos. The lab is part of the nuclear weapons complex that Brooks' agency oversees.

"These management and security issues can have serious implications for the security of the United States," Bodman in a statement announcing Brooks' departure.

While the agency's management "has done its best to address these concerns, I do not believe that progress in correcting these issues has been adequate," Bodman said.

"Therefore, and after careful consideration, I have decided that it is time for new leadership at the NNSA," said Bodman

Bodman said an acting head of the agency will be named soon.

Brooks has more than 40 years of experience in national security and nuclear nonproliferation issues. He led the negotiating team that worked on the START arms reduction treaty signed with Russia in 1991.

Widely respected for his knowledge of nuclear weapons and nonproliferation issues, Brooks nevertheless has been a target of some members of Congress.

When it was learned that Brooks did not inform his superiors for eight months about the computer theft of data on 1,500 employees, Rep. Joe Barton last year sought Brooks' immediate dismissal.

"His departure is long overdue," Barton, R-Texas, said Thursday.

With Democrats now in charge of the House and Senate, there has been talk of hearings into the administration's response to security breaches at the labs.

"It will take more than a new boss to fix the problems, which are far more systemic and pervasive in nature," said Rep. Edward Markey, D-Mass., a member of the House Energy and Commerce Committee, which is considering hearings.

Some lawmakers have criticized Brooks' pursuit of a bunker-buster bomb, a project promoted by Brooks but abandoned last year because of congressional opposition. Others have questioned whether Brooks' agency made a clear enough argument on behalf of the weapon.

At the same time, Brooks' agency has come under criticism for not making enough progress in working out an agreement with Russia for the disposal of tons of weapons-grade plutonium.

Sen. Pete Domenici, R-N.M., said he has been concerned "about the effectiveness" of the agency for some time and that Bodman now "has sent a clear message" that operations need to be improved.

In his message to employees, Brooks bemoaned the lack of progress in solving security problems at Los Alamos, saying the agency was formed "to prevent such management problems from occurring.

"We have not yet done so in over five years," he said.

The agency is responsible for managing the nuclear weapons complex that includes the Los Alamos and Lawrence Livermore nuclear weapons research labs. The agency has more than 37,000 employees, most of them contractor personnel.

Congress created the agency within the Energy Department in response to the uproar over the Wen Ho Lee security lapses at Los Alamos in the late 1990s. The belief was that security would improve by putting all nuclear weapons programs under a semiautonomous agency.

But since then, there have been repeated security problems - most of them at Los Alamos - from misplaced and lost computer disks containing classified information to alleged misuse of credit cards, and last October's discovery of classified documents in a drug raid.