The move by Secretary of State Condoleezza Rice marks a return to government for Mr Wolfowitz, a conservative with close ties to President George W Bush's White House.

Mr Wolfowitz was replaced as World Bank chief in June, after a stormy two-year tenure. His leadership was undermined by a furore over a hefty compensation package he arranged in 2005 for Shaha Riza, a bank employee and his girlfriend.

Mr Wolfowitz will become chairman of the International Security Advisory Board, which reports to the secretary of state. The panel's duty is to supply independent advice on arms control, disarmament, nonproliferation and related subjects to the secretary.

The portfolio includes commentary on several high-profile issues now before the administration, including pending nuclear deals with India and North Korea and an offer to negotiate with Iran over its disputed nuclear program.

Mr Wolfowitz currently is a defence and foreign policy studies scholar at the American Enterprise Institute, a conservative Washington think tank.

Mr Wolfowitz has a lengthy career in government, including service as deputy secretary of defense during Bush's presidency.

As the No. 2 official at the Pentagon, Mr Wolfowitz was a major architect of the Iraq war.

His stint at the development bank was marked by controversy from the start. Controversy over his companion's job arrangements put the bank's staff of 10,000 worldwide in revolt, tarnished the bank's reputation and strained relations with other countries, especially Europeans, who led the charge for Mr Wolfowitz's removal. -- AP