During an appearance in the Oval Office, Trump confirmed to reporters he'd accepted Haley's resignation and said she's expected to leave the administration "at the end of the year".
Sanford, a fellow former South Carolina Governor who has been allies with Haley in the past but is now an Administration critic, said of the story: "Something doesn't smell right".
She also took credit for cutting the USA contribution to the United Nations budget, characterizing the move as moving the organization toward more efficiency.
Haley's replacement will require confirmation by the Senate, with over two-thirds of the seats in that legislative body being contested in next month's midterm elections.
Haley, who is not personally wealthy, hinted in her resignation letter to Trump that she is headed to the private sector.
Haley, 46, is the latest in a long line of high-profile departures from the administration, such as former Secretary of State Rex Tillerson, who was sacked in March, and Steve Bannon, Trump's chief strategist, who left in August 2017.
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At the U.N., Haley helped spearhead the Trump administration's efforts to combat what it alleged to be anti-American and anti-Israel actions by the worldwide body.
"I proudly serve in this administration, and I enthusiastically support most of its decisions and the direction it is taking the country", Ms Haley wrote. But the Post's John Hudson speculates Haley's opposition also could've driven her departure. "My goal is that we make sure that everything is in good place for the next ambassador to come in".
Trump suggested that Haley may come back to his administration in a different role after her break.
'For all of you that are going to ask about 2020, no, I am not running for 2020, ' she said.
"I have given everything I've got these last eight years".
"We're all happy for you in one way, but we hate to lose (you)", Trump said. She has served at the United Nations since the start of Trump's presidency. She was re-elected on November 4, 2014.
Born in Cairo, Powell moved to the United States with her family at the age of four and had to learn to speak English.
CNN has referred to her as "the breakout star" of Trump's cabinet.
The daughter of immigrants from India, Mrs Haley was a frequent critic of Mr Trump during his election campaign.
"We are a better country because they are in this administration", Haley enthused of Ivanka and Jared Kushner.
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