By Michael Conlon and Andrew Stern
CHICAGO (Reuters) - President-elect Barack Obama called on Illinois Gov. Rod Blagojevich to resign on Wednesday after he was charged with trying to sell Obama's U.S. Senate seat and swap favours for money.
Obama spokesman Robert Gibbs said Blagojevich needed to step down because "under the current circumstances it is difficult for the governor to effectively do his job and serve the people of Illinois."
Moves boiled up within Obama's home state of Illinois to strip Blagojevich of the power to make the appointment he allegedly tried to barter, either by driving him from office through legal means or letting voters fill the Senate seat with a special election.
Obama, who takes office on January 20, resigned from the Senate after winning the November 4 presidential election.
Blagojevich showed no sign of stepping down after he was arrested at home before dawn on Tuesday and then released on his own recognizance without having to post bail.
His office said Bob Greenlee, one of three deputy governors serving in appointed positions, had resigned. No reason was given.
Obama, who earlier called the charges against the two-term governor sobering and sad, has had a cool relationship with the fellow Democrat -- who has been under investigation on other issues for years -- although both of their political careers sprouted in the often corrupt seedbed of Chicago politics.
ABC News and the Chicago Sun-Times said Jesse Jackson Jr., a U.S. congressman from Illinois who waged a public campaign to win Obama's vacated seat, was the person referred to by Blagojevich in one of the wiretaps cited in the charges.
In a transcript of the recording released by prosecutors, Blagojevich said associates of the unnamed Senate hopeful were willing to raise up to $1 million (676,000 pounds) in exchange for the post.
Jackson, son of civil rights campaigner Jesse Jackson, denied that happened in an interview with ABC.
"It is impossible for someone in my staff, it is impossible for someone on my behalf, had a conversation that would suggest any kind of quid pro quo or payments or offers," Jackson said.
He said prosecutors had asked him to share his thoughts about the Senate selection process and he planned to do so after consulting an attorney.
"I have been informed that I am not a target of this investigation," Jackson added.
GOVERNOR UNDER SIEGE
The Chicago Tribune and Chicago Sun-Times newspapers ran nearly full-page editorials demanding the immediate resignation of Blagojevich.
He left his stately brick house in Chicago on Wednesday, his 52nd birthday, under siege by news media but said nothing.
"It's outrageous," said Beth Pinter, a middle-aged woman who lives a block away and was out walking her two dogs. "He should resign, but he won't because he's a sociopath ... I don't want him in my neighbourhood because he's a crook."
The saga threatens to follow Obama to Washington at a time when the president-elect is preparing for his White House move with ambitious plans that include proposals to get the U.S. economy moving.
"Among the remarkable facts of the recent presidential election is that Barack Obama emerged from this political culture virtually untainted -- and with Chicago's political mores all but unexamined by the press," the Wall Street Journal said in an editorial on Wednesday.
Democrats, with independent allies, will have at least 58 seats in the 100-seat Senate when the new Congress convenes if Obama's successor as Illinois senator is a Democrat.
That might not happen if the matter goes to a special election. A Minnesota Senate seat is still undecided.
Since the state constitution gives the governor sole power to fill Senate vacancies, there were legal questions over how to proceed.
Impeachment in the legislature could be a lengthy process. The state's attorney general was exploring whether the state supreme court could oust Blagojevich, one report said.
In the meantime, the governor retains the power to appoint anyone, including himself, to the empty seat. But Senate leaders have said any appointment he makes would be tainted.
Blagojevich's office issued a statement on Tuesday saying the allegations would not affect the functioning of the state.
The governor and his chief of staff, John Harris, were charged in a federal complaint with conspiracy to commit mail and wire fraud and a second count of solicitation of bribery.
Prosecutors said Blagojevich was caught on tape using an expletive as he described the Senate seat as something so valuable "you just don't give it away for nothing."
The federal charges allege Blagojevich tried to trade the Senate appointment for personal gain and muscle the Chicago Tribune into firing critical editorial writers by interfering in a deal involving the sale of Wrigley Field, the baseball stadium owned by the paper's parent company.
(Additional reporting by Karen Pierog in Chicago; Editing by Peter Bohan and John O'Callaghan)
