The World Bank said in a statement on Wednesday that Stiglitz, who chaired President Bill Clinton's Council for Economic Advisers before moving to the bank, was returning to an academic post after almost three years as chief economist. "Joe has been an important and strong voice for the interests of the developing countries, and especially for the poor," bank President James Wolfensohn said. "We will Miss Him greatly."

Wolfensohn, who has occasionally clashed with Stiglitz, said he had asked Stiglitz to continue to work for him as a special adviser and to head the committee looking for a new Chief economist at the bank. "We will carry on with the work ... to transform the development business as we know it," Wolfensohn said.

The job is a high-profile position that has in thepast led to bigger and better things. Previous incumbents include U.S. Treasury Secretary Lawrence Summers and Stanley Fischer, now No. 2 at the IMF.

The World Bank, set up to help revive a troubled world economic order from the turmoil of World War II, concentrates on development issues and easing poverty, while its sister organisation, the IMF, looks more closely at tax and monetary matters. But the dividing lines between the two institutions blurred as capital started flowing more freely between rich and poor countries and the cash-rich bank helped fund the multibillion dollar rescue deals in the financial crises of 1997-99. Stiglitz, 56, earned a reputation for controversy during his tenure at the bank.