Barack Obama has given the thumbs up for US defence secretary Chuck Hagel to resign from the his position in the cabinet.

The president has been in discussions with Hagel about his future for the last two weeks and is expected to announce his resignation in a Rose Garden appearance on Monday, a White House source told the New York Times.

Obama made the decision to allow 68-year-old Hagel to resign after acknowledging the global threat posed by the so-called Islamic State - or Isis - required someone with a different skill set.

The newspaper makes Michèle Flournoy, the former under secretary of defense; Senator Jack Reed, a former officer with the Army; and Ashton Carter, a former deputy secretary of defense as front runners for the post.

Hagel was the only Republican on Obama's national security team after succeeding predecessor Leon Panetta in 2013.

Hagel was America's security chief at a time when Obama pulled troops out from Afghanistan and during the emergence of Isis.

He became the first former enlisted combat soldier to hold the office of secretary of defence but is said to have failed to inspire the Pentagon.