The daughter of immigrants from India, Mrs Haley was a frequent and early critic of Mr Trump during his election campaign whilst she served as the Republican governor of SC.
"I have given everything I've got these last eight years", she said, referring to her six years as SC governor as well as her time at the United Nations. Trump said he hopes she'll return to serve in another capacity: "You can take your pick".
Moments following the report's release, President Trump announced he and Haley will make a "big announcement" in the Oval Office at 10:30 a.m.
Haley, the former governor of SC, was confirmed as U.N. Ambassador nearly immediately after Trump's inauguration. She denies she is running for president in 2020.
Haley's influence at UN was blunted by Trump policy decisions that many other nations opposed, including recognizing Jerusalem as the Israeli capital, cutting aid to Palestinians and announcing a US withdrawal from the U.N. HR Council.
Calling Mr Trump's adviser and son in law Jared Kushner a "hidden genius", Ms Haley said the "Middle East peace plan is so unbelievably well done". The president said Haley told him six months ago she would be leaving at the end of the year.
"I don't get confused", Haley said in a sharply-worded rejoinder to the West Wing.
Sitting beside Trump in the Oval Office, Haley said her 18-month stint at the United Nations had been "an honor of a lifetime" and said she would stay on until the end of the year.
Haley has pressed for a hawkish line on Iran, justified U.S. cuts to foreign assistance and earlier this year led the United States in bolting from the UN Human Rights Council, accusing it of bias against Washington and Israel. It came in response to an anonymous essay in The New York Times by a senior administration official that alleged there to be a secret "resistance" effort from the right in Trump's administration and that there were internal discussions of invoking the 25th amendment to remove him from office. "As a private citizen, I look forward to supporting your re-election as President, and supporting the policies that will continue to move our country toward even greater heights".
The resignation, first reported by Axios, sent shockwaves across Washington. She was re-elected in 2014. She's helped rein in Iranian aggression, moved progress on a denuclearized North Korea, assured Israel we have her back, and overall just gained the USA more respect on the worldwide stage.