Besieged World Bank President Paul Wolfowitz is negotiating an agreement with the bank board to resign, World Bank sources said on Wednesday.

The sources said Wolfowitz, former U.S. deputy defense secretary, insisted that he will resign voluntarily and the bank should share some responsibility for his pay-and-promotion package for Shaha Riza.

Shaha Riza, Wolfowitz's girlfriend and once a staff member in the bank, was removed to work in the U.S. State Department when Wolfowitz took over at the World Bank in 2005, to avoid any conflict of interest.

While still on the World Bank payroll, Riza was rapidly promoted and ended up with a package of tax-free salary to about 193,000 dollars, even more than Secretary of State Condoleezza Rice receives before tax.

Pressure on Wolfowitz to resign has grown since a panel report released on Monday concluded Wolfowitz has placed himself in a conflict of interest situation over the Riza's assignment and pay package.

"He should have withdrawn from any decision-making in the matter," said the report, adding the informal advice provided by the World Bank ethics committee was not a model of clarity.

The panel recommended the bank's 24-member board to "consider whether Mr. Wolfowitz will be able to provide the leadership needed to ensure that the Bank continues to operate to the fullest extent possible in achieving its mandate."

However, Wolfowitz responded immediately on Monday that the report was unfair and unwarranted.

"It is highly unfair and unwarranted to now find that I engaged in a conflict of interest because I relied on the advice of the ethics committee as best I understood it," he said.

"I respectfully submit, to criticize my actions or to find the mas a basis for a loss of confidence would be grossly unfair and would be contrary to the evidence we have presented to you," Wolfowitz also said in a statement to the board on Tuesday.

"Rather than fix blame for something that wasn't wrong, we should all acknowledge our responsibility as I have acknowledged mine," he added.

Meanwhile, the Bush administration, which had voiced unwavering support for Wolfowitz until now, also made in a major shift under pressure to signal it would consider a change in leadership at the World Bank.

The U.S. is willing to consider "all options," including Wolfowitz's resignation, as part of "a resolution of the question of what is best for the future of the institution," said U.S. officials on Tuesday.

"This has certainly been a bruising episode for the bank, and what you have to do is figure out a way forward to maintain the integrity of the institution," said White House press secretary Tony Snow Wednesday, hinting Wolfowitz will resign voluntarily.

U.S. media said the White House overture could provide Wolfowitz with a face-saving way to bow out of the institution, allowing him to avoid being formally dismissed by the bank's board, said the report.

Down the road, it could also ensure the White House retains its influence in picking a successor, since the U.S. would be seen as opening the door for Wolfowitz's departure.

Though prominent officials from Europe to Latin America have publicly called on Wolfowitz to resign, a decisive vote would break sharply with the bank's consensus-minded culture, while presenting difficult questions over the procedure of appointing its president.

Never in the six decades of the World Bank's existence has the board removed the institution's leader, who, by tradition, is selected by the president of the United States, the bank's largest shareholder.

Editor: Yan