US Deputy Attorney General James Comey said on Tuesday Attorney General John Ashcroft, who was appointed by President George Bush, had withdrawn from the politically sensitive investigation into possible crimes by White House officials.
Declining to give details in any advances in the case, Comey said Patrick Fitzgerald, a US Attorney in Chicago, had been named as special counsel to take charge of the probe.
The Justice Department opened a formal investigation on 30 September into "possible unauthorised disclosures" by the Bush administration of the identity of a covert CIA agent.
Joseph Wilson, a former ambassador, has alleged the name was leaked as an act of revenge for his challenge to the administration over the Iraq war.
The "highly dubious" accusation wound up in Bush's State of the Union address in January
Wilson says the Bush administration sent him to Niger in early 2002 to look into a charge that Saddam Hussein sought uranium from Africa, and that he had reported back that it was false.
Even after a warning by the State Department's intelligence service that the charge was "highly dubious", the accusation wound up in Bush's State of the Union address in January, sourced to the British government.
In an article for The New York Times on 6 July 2003, Wilson said the Bush administration had "twisted" evidence to exaggerate the case against Iraq.
Just a week later, conservative writer Robert Novak cited "two senior administration officials" as telling him that the diplomat's wife, Valerie Plame, was a CIA agent.
It is a criminal offence to name a covert CIA agent.
Bush made ''highly dubious'' claims
about Iraq's hunt for uranium
The scandal is the biggest to hit the administration since Bush took office in January 2001.
But the White House has denied that top officials, including Karl Rove, Bush's chief political adviser, are behind the leak.
It vowed total cooperation after the investigation was launched, ordering staff to hand over any related documents and e-mails.
The authorities earlier rejected opposition Democrat calls for a special counsel to look into the case because the attorney general is a political appointee who is too close to the White House.
Democrats said the administration still had to show that it was cooperating fully with the investigation.
"Today's news is as welcome as it is overdue," said Tom Daschle, the Democrat leader in the Senate. "Nearly six months have passed since 'two senior administration officials' reportedly leaked the identity of an undercover CIA agent."