US Defence Secretary Donald Rumsfeld said on Wednesday that Feith had told him after the US presidential election in November that he planned to step down by the middle of the year to return to private life.
"I'm hopeful he'll stay until we find an appropriate successor. We have not started looking for one," Rumsfeld said.
A lawyer by profession, Feith was a highly influential figure in the small circle of advisers who surrounded Rumsfeld as he led the US into wars in Afghanistan and Iraq.
"Feith was a theorist whose ideas were often impractical; among some uniformed officers in the building, he had a reputation for confusing abstract memoranda with results in the field"
Retired general Tommy Franks, commander of US-led invasions of Iraq and Afghanistan
He left his mark on a range of controversial defence policies
over this four-year term - the withdrawal from the 1972 Anti-Ballistic Missile treaty, a new policy on nuclear forces, the policy of pre-emption to protect the US against attacks by weapons of mass destruction (WMD), and the much criticised post-war planning for Iraq.
Most recently, he led planning for a sweeping overhaul in the way US forces are deployed overseas. The "global force posture review", as it is called, is expected to reduce US military presence in Western Europe, shifting it eastward to Central and Southeast Asia.
Feith has had his share of critics.
Retired general Tommy Franks, who commanded the US-led invasions of Afghanistan and Iraq, memorably referred to Feith in a pep talk with military planners as "the dumbest [expletive] guy on the planet".
"Feith was a theorist whose ideas were often impractical; among some uniformed officers in the building, he had a reputation for confusing abstract memoranda with results in the field," Franks wrote in his memoir, American Soldier.
"There are certain kinds of problems in the world that need to get addressed before they fully mature, and addressing them doesn't necessarily mean combat operations"
Douglas Feith, US undersecretary of defence for policy
But Lawrence DiRita, the Pentagon's chief spokesman, said Frank's comments arose from the natural tensions between a commander and a civilian policymaker.
He said Feith enjoyed close relations with other military leaders but stood out for keeping the discussion on the "war on terror" above the purely military solutions.
"He has spent a lot of time inside the inter-agency process
thinking about other ways to think about this battle of ideas," he said.
Earlier in the day, Feith talked with journalists about the shifting priorities that will underpin a new strategy review that will shape the US military for years to come, saying it will give greater emphasis to terrorism and other unconventional threats rather than the usual conventional military threats.
He was asked how his thinking on pre-emption had changed in light of the failure to find weapons of mass destruction in Iraq.
"The issue of when the United States should act to deal with a problem is a really tough question, and I think gets really oversimplified in a lot of the discussion that focuses on the term pre-emption," he said.
"There are certain kinds of problems in the world that need to
get addressed before they fully mature, and addressing them doesn't necessarily mean combat operations. It may mean diplomacy, it may mean different kinds of moves in the world, for example to interdict WMD transfers."
Feith had a wealth of experience in the private sector before joining the US Department of Defence and has expressed interest in continuing with his previous career in law.
His own biography states that he has specialised in "technology transfer, joint ventures and foreign investment in the defence and aerospace industries".
Before entering government, and as an attorney at the Washington firm of Feith and Zell, his website publicised his legal expertise in "establishing joint ventures with leading US aerospace manufacturers for manufacture and sale of missile systems, to the US Department of Defence and worldwide".