A co-chairman for Rudy Giuliani's veterans' coalition in New Hampshire resigned Saturday after telling a British newspaper that Muslims need to be chased "back to their caves."

The response was swift after the GOP presidential candidate faced questions Friday night about the comments, made by John Deady during a video interview with the Guardian at a Giuliani house party in Manchester, N.H. Deady was named co-chairman of the New Hampshire Veterans for Rudy over the summer.

"Mr. Deady offered his resignation from his volunteer position in the campaign and I accepted his resignation," Giuliani New Hampshire Chairman Wayne Semprini said in a  statement.

In the original Guardian interview, Deady said Giuliani is the best candidate to handle "one of the most difficult problems in current history" -- "the rise of the Muslims."

Click here to see the video of Deady's comments for the Guardian.

He added: "We need to keep the feet to the fire and keep pressing these people until we defeat or chase them back to their caves or, in other words, get rid of them."

Later in an interview with the Talking Points Memo Web site, Deady confirmed he made the statements and said he was referring to all Muslims.

"I don't subscribe to the principle that there are good Muslims and bad Muslims," Deady said in the article. "They're all Muslims." 

Click here to read the Talking Points Memo article.

Giuliani's campaign was quick to contain the damage in the final days before the Jan. 3 Iowa caucuses and Jan. 8 New Hampshire primary.

Similar fallout occurred recently in the Hillary Clinton camp when New Hampshire adviser Bill Shaheen warned in an article that Democratic rival Barack Obama's admissions of past drug use could provide easy fodder for the GOP if he were the nominee. Shaheen resigned after making the comments.

FOX News' Carl Cameron and Mosheh Oinounou contributed to this report.