WASHINGTON - Margaret D. Tutwiler, the State Department veteran who was summoned from abroad to overhaul the public diplomacy effort, said Thursday that she was resigning to take a position at the New York Stock Exchange.

The move was a blow to the Bush administration's hopes to improve America's image and better articulate its policy goals as the country faces growing opposition to the war in Iraq and to its support of Israel's plan to redraw its boundaries.

It also highlighted the administration's difficulty in retaining managers of public diplomacy. Ms. Tutwiler's predecessor in the job was Charlotte Beers, a former New York advertising executive, who resigned in March of last year. At the White House, another official responsible for the administration's international message, Tucker Eskew, quit after about a year.

Ms. Tutwiler, a blunt-spoken Washington insider who served as spokeswoman for Secretary of State James A. Baker III and later went on to become President Bush's ambassador to Morocco, heads to the stock exchange after a management shake-up there.

In an interview on Thursday, Ms. Tutwiler, who is 53, said she had returned to government saying she would serve only a single presidential term. Although friends said she had voiced frustration in her State Department job, she denied it Thursday. "Absolutely not," she said.

Her new title at the stock exchange will be executive vice president for communications and government relations, the statement said. Ms. Tutwiler will leave on June 30, a pivotal date for the American-led forces in Iraq, when the authorities plan to transfer sovereignty to Iraqis. Mark Helmke, a policy aide to Senator Richard G. Lugar, the Indiana Republican, said Ms. Tutwiler's departure would probably mean that her job, under secretary of state for public affairs, would remain vacant until well into next year. It will be difficult to find a replacement in the short period before the November election, he noted, and with the expected departure of Secretary of State Colin L. Powell by year's end, the delay could be compounded.

Ms. Tutwiler was called back to the State Department in December to address concerns within the administration and elsewhere that the United States had failed to capitalize on the overthrow of Saddam Hussein and was facing growing hostility in Iraq and the Middle East. She came in to replace Ms. Beers, whose tenure was best remembered for producing videos that showed how Muslims enjoyed religious freedom in the United States. Several Arab countries refused to broadcast the material, and some State Department diplomats mocked it as naïve.

Patricia S. Harrison, the assistant secretary for educational and cultural affairs, took over in an acting capacity after Ms. Beers left, and she is expected to do the same after Ms. Tutwiler leaves.

An extensive report on public diplomacy in the Arab and Muslim world, released in October, painted a dire picture of American efforts to reach out to foreign countries and build support for Washington's actions. The bipartisan report, called "Changing Minds, Winning Peace," found that America's prestige had dwindled, that its good works were largely ignored and that it lacked strategic direction in its message.

Ms. Tutwiler embraced the conclusions of the report. In her first public testimony as under secretary, she said that the United States had let public outreach languish since the cold war, and that it would take "years of hard, focused work" to fix the problem.

Copyright 2004 The New York Times Company

###