A champion of the nationalist-populist agenda that carried Trump to power last November, the 63-year-old Bannon left a White House reeling from the fallout over the president's response to a violent white supremacist rally.
"I want to thank Steve Bannon for his service. He came to the campaign during my run against Crooked Hillary Clinton - it was great! Thanks," Trump tweeted on Saturday.
Bannon, a hero of the so-called "alt right" whose presence in the West Wing was controversial from the start, had become the nucleus of one of several competing power centers in a chaotic White House.
With Trump under fire for insisting anti-racism protesters were equally to blame for violence at a weekend rally of neo-Nazis and white supremacists in Charlottesville, Virginia, the president faced renewed pressure to let Bannon go.
It remains to be seen what role the serial provocateur will continue to play from outside the White House, but Bannon himself vowed to keep pushing Trump's right-wing agenda, as he returned to his former home at the ultra-conservative website Breitbart News.
"If there's any confusion out there, let me clear it up: I'm leaving the White House and going to war for Trump against his opponents -- on Capitol Hill, in the media, and in corporate America," Bannon said in an interview within hours of leaving the White House.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)