Freeman’s withdrawal came as a surprise to many in Washington, particularly since it came only hours after Adm. Dennis Blair, the administration’s director of national intelligence (DNI) who made the appointment, issued a strong defence of Freeman during his testimony before the U.S. Senate.

His withdrawal is likely to be viewed as a significant victory for hardliners within the so-called "Israel lobby," who led the movement to scuttle his appointment, and a blow to hopes for a new approach to Israel-Palestine issues under the Obama administration.

A brief notice posted late Tuesday on the DNI website stated that "Director of National Intelligence Dennis C. Blair announced today that Ambassador Charles W. Freeman Jr. has requested that his selection to be Chairman of the National Intelligence Council not proceed. Director Blair accepted Ambassador Freeman’s decision with regret."

The DNI did not provide any further reason for Freeman′s withdrawal.

Senator Chuck Schumer, a critic of Freeman who privately conveyed his concerns to White House Chief of Staff Rahm Emanuel last week, released a statement taking credit for the withdrawal, according to Greg Sargent of the Plum Line blog.

"Charles Freeman was the wrong guy for this position," Schumer′s statement read. "His statements against Israel were way over the top and severely out of step with the administration. I repeatedly urged the White House to reject him, and I am glad they did the right thing."

The battle over Freeman began in late February, soon after Blair appointed him as chairman of the National Intelligence Council (NIC). The NIC, among other responsibilities, is tasked with producing National Intelligence Estimates (NIEs), which are consensus judgments of all 16 intelligence agencies.

Freeman was reportedly Blair’s hand-picked choice for the job. He is a polyglot with unusually wide-ranging foreign-policy experience - his previous jobs have included chief translator during President Richard Nixon’s historic 1972 trip to China, ambassador to Saudi Arabia, and assistant secretary of defence for international security affairs.

But Freeman is also known for his outspoken and often caustic political views. He has been especially critical of the Bush administration’s conduct of the "war on terror" and of Israeli policies in the occupied territories.

Initial resistance to the appointment came from neoconservatives and other pro-Israel hardliners who were opposed to Freeman’s critical views of Israeli policies. The campaign against Freeman was spearheaded by Steve Rosen, a former official for the powerful American Israel Public Affairs Committee (AIPAC) who is currently facing trial for allegedly passing classified information to the Israeli government.

It was quickly taken up by neoconservative commentators in the Wall Street Journal, the Weekly Standard, and the New Republic, among other places.

However, Freeman’s critics soon shifted their focus from his views on Israel to his ties with Saudi Arabia. The Saudi royal family has provided funding to the Middle East Policy Council, a think tank that Freeman headed, leading to allegations that he was "on the Saudi payroll" or even a "Saudi puppet."

Last week, 11 congressional representatives - including several with major financial ties to AIPAC and other right-wing pro-Israel groups - called on the DNI’s inspector-general to investigate Freeman’s financial ties to Saudi Arabia.

Later in the week, Blair sent the representatives a letter offering his "full support" for Freeman and praising the appointee’s "exceptional talent and experience." The letter also discussed Freeman’s financial ties to Saudi Arabia, stressing that "he has never lobbied for any government or business (domestic or foreign)" and that he "has never received any income directly from Saudi Arabia or any Saudi-controlled entity."

Blair’s letter appeared to have defused the case against Freeman based on his Saudi ties.

On Monday, the seven Republican members of the Senate Intelligence Committee sent their letter of concern to Blair, but they made no mention of the Saudi charges that formed the backbone of their House colleagues’ letter from the previous week. Instead, the senators focused on Freeman’s alleged intelligence inexperience and his "highly controversial statements about China and Israel."

It was the China issue that had become the central attack against Freeman in recent days. Critics pointed to a leaked email that he sent to a private listserv about the Chinese government’s 1989 repression of demonstrators in Tiananmen Square, in which he appeared to argue that the Chinese authorities’ true mistake was not the violent repression but their "failure to intervene on a timely basis to nip the demonstrations in the bud."

Blair and others countered that the email was taken out of context, and that Freeman was not describing his own views but what he referred to as "the dominant view in China."

One member of the listserv who did not wish to be identified said that Freeman’s email came in the context of an extended conversation about what lessons the Chinese leadership took from the Tiananmen Square events, and that Freeman himself has always regarded the events as a "tragedy."

Regardless, the leaked email became the focal point of the debate over Freeman. On Thursday, 87 Chinese dissidents and human rights activists released a letter conveying their "intense dismay" at his appointment and asking President Obama to withdraw it.

But others stepped in to defend Freeman’s record on human rights in China. China scholar Sidney Rittenberg told James Fallows of the Atlantic that Freeman was "a stalwart supporter of human rights who helped many individuals in need" during his diplomatic career in Beijing. Jerome Cohen, an expert in Chinese law, told Fallows that the allegations that Freeman endorsed the Tiananmen Square repression were "ludicrous."

Fallows was one of several prominent media figures - including Joe Klein of Time and Andrew Sullivan of the Atlantic - who came to Freeman’s defence in recent days. While many of them disagree with Freeman’s outspoken views, they warned against what Fallows calls the "self-lobotomisation" of U.S. foreign policy that results from shutting out dissenting voices.

Diplomatic and intelligence professionals in the foreign policy bureaucracy - in which Freeman was seen as enjoying strong support - also rallied to his defence.

Last week, 17 former U.S. ambassadors – including former ambassador to the U.N. Thomas Pickering and former ambassador to Israel Samuel Lewis – wrote a letter to the Wall Street Journal praising Freeman as "a man of integrity and high intelligence who would never let his personal views shade or distort intelligence estimates."

On Tuesday, seven former senior intelligence officials wrote to Blair in support of Freeman. They called the attacks on him "unprecedented in their vehemence, scope, and target" and perpetrated by "pundits and public figures... [who are] aghast at the appointment of a senior intelligence official able to take a more balanced view of the Arab-Israel issue".

These endorsements by figures with solidly establishmentarian credentials appeared to have strengthened Freeman’s position. This made Tuesday’s announcement especially unexpected, since many felt that Freeman had succeeded in riding out the storm.

Despite the Saudi and Chinese angles of the Freeman controversy, many still saw it as heart a neoconservative campaign to shut out critics of Israel from positions of power.

"The whole anti-Freeman effort was engineered by the people who fear that Obama will abandon current policies toward Israel from acceptance of the occupation to forceful opposition to it," M.J. Rosenberg of the Israel Policy Forum wrote on the Huffington Post.

The timing of Freeman’s withdrawal is likely to prove especially bad for the Obama administration, since it came after Blair had committed a significant amount of political capital to defending his appointee.

In his testimony before the Senate on Tuesday, Blair responded to concerns raised by Lieberman by praising Freeman’s "inventive mind" and argued that his critics "misunderstand the role of the development of analysis that produces policy."

"I can do a better job if I’m getting strong analytical viewpoints to sort out and pass on to you and the president than if I’m getting precooked pablum judgments that don’t really challenge," Blair told Lieberman.

Lieberman seemed unsatisfied with Blair’s answer. "OK, I guess I would say, ‘to be continued’," he replied.

As it turned out, Lieberman did not have to wait long to get the response he wanted.