US President Donald Trump on Friday fired Stephen Bannon as his chief strategist in the latest high-level White House shake-up, removing a powerful and controversial figure known for far-right political views.

Bannon was a force behind some of Trump's most contentious policies, including a travel ban on people from several Muslim-majority nations, and has fought with more moderate factions inside a White House riven with rivalries and back-stabbing.

Bannon's ouster comes with the president, seven months into his term in office, increasingly isolated over his comments following white supremacist violence in the Virginia college town of Charlottesville last Saturday.

As Trump came under fire from prominent fellow Republicans, business leaders and US allies abroad, he faced mounting calls for Bannon's ouster.

"White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve's last day," White House spokeswoman Sarah Sanders said in a statement on Friday. "We are grateful for his service and wish him the best."

A champion of economic nationalism and a political provocateur, Bannon, 63, is a former US Navy officer, Goldman Sachs investment banker and Hollywood movie producer.

Bannon had been in a precarious position before but Trump opted to keep him, in part because his chief strategist played a major role in his 2016 election victory and is backed by many of the president's most loyal rank-and-file supporters.

The decision to fire Bannon could undermine Trump's support among far-right voters but might ease tensions within the White House and with party leaders. Republicans control the White House and both chambers of Congress but have been unable to pass major legislative goals including a healthcare legislation overhaul because of fierce intra-party divisions.

Trump ran into trouble in recent days after saying anti-racist demonstrators in Charlottesville were as responsible for the violence as the neo-Nazis and white supremacists who instigated the protests.

Those remarks sparked rebukes from fellow Republicans, top corporate executives and some close allies even as some supporters, including vice president Mike Pence, stood by Trump.

Under pressure from moderate Republicans to fire Bannon, Trump declined to publicly back him on Tuesday, although he left his options open. "We'll see what happens with Bannon," he told reporters at Trump Tower in New York.

On July 28, Trump replaced his beleaguered White House chief of staff, Reince Priebus, installing retired General John Kelly in his place in a major shake-up of his top team. Trump then ousted White House communications chief Anthony Scaramucci on July 31 over an obscene tirade just 10 days after the president named him to the post. Scaramucci's hiring had prompted Sean Spicer, a Priebus ally, to abruptly resign as press secretary.

A source familiar with the decision, which had been under consideration for a while, said Bannon had been given an opportunity to depart on his own terms. "The president made up his mind on it over the past couple of weeks," the source said.

Kelly had been evaluating Bannon's role within the White House. "They gave him an opportunity to step down knowing that he was going to be forced to," the source said.

Bannon damaged his standing by giving an interview to the liberal American Prospect this week in which he was seen to be undercutting Trump's position on North Korea. Bannon told associates he thought he was talking to an academic and thought he was off the record.

He has told friends he could go back to Breitbart News if he were to leave the White House.

Kelly's appointment was intended to bring order to a fractious White House beset with behind-the-scenes intrigue and back-stabbing.

Bannon formerly headed the right-wing Breitbart News website and spearheaded its shift into a forum for the "alt-right," a loose online confederation of neo-Nazis, white supremacists and anti-Semitics. Under Bannon's leadership, the Breitbart site presented a number of conspiracy theories about former Democratic presidential candidate Hillary Clinton, as well as Republicans deemed to be lacking in conservative bona fides.

In recent weeks, Breitbart has published a series of articles making a case for Lieutenant General HR McMaster's ouster as national security advisor on the basis that he is not a strong ally of Israel and that he has staffed the National Security Council with holdovers from the Obama administration.

Critics have accused Bannon of harboring anti-Semitic and white nationalist sentiments. In a 2007 court filing during divorce proceedings, Bannon's former wife accused him of making anti-Semitic comments on at least three occasions.

Just a year ago, Bannon took over as head of Trump's presidential campaign. In that role, Bannon helped engineer Trump's surprise victory over Clinton.