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Following a distant second showing in New Hampshire, preceded by a third place rout in Iowa, Howard Dean (search) on Wednesday overturned his Democratic presidential campaign operations and put a longtime Al Gore adviser in charge of daily operations.

Dean announced Wednesday that Roy Neel (search) would take over as chief executive officer responsible for field activities for the campaign. Campaign manager Joe Trippi (search) stepped down despite early indications that he had been asked to stay on the team.

"I am deeply grateful to Joe Trippi, who has decided to leave the campaign. Joe has made enormous contributions not just to our campaign but to American politics — revolutionizing the way in which people are brought into the democratic process and helping hundreds of thousands of people to believe in political change again," Dean said in a written statement.

"Roy brings enormous experience both in management and national politics. He will be an invaluable resource to our campaign," Dean added.

According to sources close to the campaign, after two weeks of disagreements on the campaign's focus, Dean, apparently frustrated with the direction of his campaign, asked Trippi to stay on as a senior adviser who would focus on the big picture, and develop strategy and new innovations for the campaign.

Before Trippi's resignation, the campaign had been careful not to characterize the moves as a demotion of Trippi, but rather a devolution of his daily role. But Trippi, who is credited with a highly successful Internet campaign and other new endeavors, said he did not want to be in a position where he answered to Neel or Neel answered to him, the sources told Fox News.

In a brief statement, Trippi made no mention of any frustrations between him and his former boss.

"I've always believed that the most important thing was to change our country and our politics. I'm proud of all of you and the work we have done together. I may be out of the campaign but I'm not out of the fight. Don't give up — stay with Howard Dean's cause to change America," Trippi said in his last statement from the Dean for America camp.

It is unclear whether he would continue to advise from the sidelines, but disagreements between Trippi and Dean have stalled the campaign's operations. The two had argued over whether competing for all or some of the delegates emerging from the Feb. 3 primary would be a losing proposition.

According to sources, Trippi had argued that Dean would be smarter to hang in the weeds before the seven state races next Tuesday and instead concentrate on Michigan. The thinking was that if Dean continued to come in second or third in the seven states, he would not only allow Kerry to take the momentum and pull away by the end of the week but Dean would then be out of money.

Several lawmakers who support Dean told him in a conference call on Wednesday that second place is not good enough to win the nomination.

"He said he understood," said one lawmaker who was involved in the call.

Trippi apparently wanted to forego Tuesday's races with its combined 269 delegates and instead put the emphasis on a long-term strategy that focused on the Feb. 24 Michigan primary and the state's 154 delegates.

Trippi told Fox News on Tuesday night that the campaign did not view South Carolina and Missouri, two states in play next week, as major battlegrounds the campaign would focus on.

Dean told The Associated Press that he disagreed with the plan to compete in only one or two of the seven states going to the polls on Tuesday and focus instead on Michigan, Wisconsin and Washington, which are also holding elections later in the month.

"We're going to try everywhere," Dean said.

In that vein, Dean has implemented cost-cutting measures in advance of the costly primaries and caucuses and has asked staff to defer their paychecks for two weeks.

But sources close to the Dean campaign say the staff there is fairly shaken by Trippi's departure. Trippi has taken on a cult status among Deaniacs and bloggers on Dean for America, who have filled the Web page with ruminations and worries, talk of other heads rolling and exclamations that Trippi was a brilliant innovator who was able to rally the nation.

"Even though Trippi was a superhero and got a lot of press, when it came to delivering the vote that was supposed to be there, this massive group of 40,000 voters in Iowa for example that they claimed were their hardcore supporters didn't show," said Roll Call executive editor Mort Kondracke.

"Trippi has been a driving force in the campaign. There's no question it's been built around his interesting personality," said Donna Brazile, who helped run Gore's campaign. "But there's more to the Dean campaign than Joe Trippi. He has been the heart of it, but he does not embody it."

Compounding the strategic meltdown at the campaign is the change in rhetoric by John Kerry, who now has the historical advantage of winning both Iowa and New Hampshire. Kerry has modified his speeches and begun talking about general election issues, suggesting that he sees himself as the presumptive nominee to take on President Bush.

Along with the change in tone, Kerry has said that the Democrats can't be for jobs but against the people who create them, corporate America ensures job creation so it's unwise to poke a finger in the eye of the job producers.

Kerry's position is a stark contrast from that of other candidates, particularly Dean, who has rallied around the idea of giving back power to the people.

Some Democratic activists said that the latest move does not bode well for the campaign.

"It's the campaign's acknowledgment that things have gotten drastically off course," said Anita Dunn, who helped run Bill Bradley's failed 2000 campaign. "Often, when that happens you make a managerial change, no matter how well the manager was doing."

Dick Harpootlian, former South Carolina Democratic Party chairman, told Fox News that despite the shake-ups, Dean is "toast."

"They're more than in trouble, they're dead," Harpootlian said of the campaign. "Joe Trippi, who was responsible for the strategy, for being so aggressive and so negative, ought to go, but my question is, why would you pick a guy who advised Gore in his 2000 campaign?"

In addition to being a top Gore lieutenant, serving as his senatorial chief of staff and head of the Gore transition team that was to have helped the former vice president move into the White House following a never-seen 2000 victory, Neel served as chief executive of the U.S. Telecom Association in Washington.

Neel pledged to join Dean's campaign after Gore endorsed the former Vermont governor on Dec. 9. Some have suggested his placement as head of the operation is a sign of Gore's influence on the campaign, but some have been left scratching their head as to why Dean would allow that.

"For Howard Dean, who is blasting away at Washington insiders — he is the anti-Washington candidate — to now hire somebody who is at the center of the Washington cess pool is pretty ironic," Kondracke.

Dean said he would continue to position himself as the outsider in the campaign who can bring new voters to the polls, but so far, Dean has not headed out to the seven states scheduled to hold elections and caucuses on Tuesday and has not yet purchased television advertising time in those states.

Fox News' Carl Cameron and Ellen Uchimiya and The Associated Press contributed to this report.