Mr Case was seen as the driving force of the merger between internet service provider America Online and media giant Time Warner at the start of 2001.

Some shareholders continue to focus their disappointment with the company's post-merger performance on me personally Steve Case

Although the merger created the world's largest media company, the firm's shares have slumped almost 70% subsequently.

The demise is because of the meltdown of the internet economy, the downturn in the advertising market and a federal investigation into AOL's accounts.

Mr Case has been seen by some as being personally responsible for the company's failures, and he said his role as chairman had become a "distraction" for the company.

'Difficult decision'

"Some shareholders continue to focus their disappointment with the company's post-merger performance on me personally," he said.

"This decision was personally very difficult for me, as I would love to serve as chairman of this great company for many years to come."

Mr Case's departure leaves the company in the hands of executives from the Time Warner side of the business.

Former AOL Time Warner chief executive Gerald Levin - who was from Time Warner but a key player in the merger with AOL - has already left the firm.

Filling Case's shoes

A company statement said Mr Case would remain as a director with joint responsibility for corporate strategy.

He said he had taken the decision "in the best interests of the company".

A successor as chairman is not expected to be announced until the annual general meeting in May.

But there is speculation that vice chairman Ted Turner, the firm's largest individual shareholder, will be offered the role.

CNN boss quits too

Hours after Mr Case resigned, the head of AOL Time Warner's 24-hour news channel CNN announced that he, too, was leaving.

Walter Isaacson, who was previously editorial director of Time, took charge of CNN in July 2001.

The TV channel reported that Mr Isaacson would leave his post at the end of spring to become president and chief executive officer of the Washington research firm the Aspen Institute.

CNN has been in on-off talks to merge its news operation with Walt Disney's ABC News.