The news comes right after a report by the New York Times stating that Trump was considering firing Bannon.
"We are grateful for his service and wish him the best," White House spokesperson Sarah Huckabee Sanders said in a statement on Friday.
The report added that Bannon has clashed with senior White House officials and members of Trump’s family.
Bannon, 63, stirred up controversy by getting job in the US Administration. Having worked for ultra-conservative media outlet Breitbart News, he has been repeatedly called by opponents a white supremacist.