Rumsfeld himself stirred speculation about his status by complaining that he had not been consulted about the creation of the new Iraq group, which will be headed by national security adviser Condoleezza Rice.
Rice sent out a one-page memo announcing that the National Security Council would play a role in overseeing the reconstruction. The Los Angeles Times reported that Bush administration officials are saying the memo signals the end of a hand-off policy that has permitted Rumsfeld's Pentagon planners to call the shots in post-Saddam Iraq.
"This is about more than just how we handled Iraq," an administration official told the New York Times. "It's about getting the Rumsfeld crowd to understand the reality of what's happening, and what's not working."
Initially, Rumsfeld reacted with displeasure to news of formation of the group. On Tuesday, he told The Financial Times and three European news organizations that he wasn't aware of Rice's classified memo explaining the move, and didn't understand why that memo was classified in the first place.
When pressed for details about the reorganized Iraq effort, Rumsfeld testily retorted: "I said I don't know. Isn't that clear? You don't understand English?"
But by Wednesday, Rumsfeld had changed his tune. During a news conference in Colorado with NATO defense ministers, he said, "I just am really quite surprised about all of this froo-fah about this memo. It's a little, short, one-page memo."
He shrugged off suggestions that Rice's decision to create a new NSC oversight group for Iraq amounted to an expression of dissatisfaction with his performance.
Rumsfeld, who oversees the work of the American civil administrator in Iraq, L. Paul Bremer, as well as the American military commanders there, was asked whether he felt Rice had gone behind his back.
"Not at all," he said, adding that he was not bothered that the consultations had not included him.
"It need not have been," he said. "It is not a problem or an issue."
One of the unusual features of the administration's effort in Iraq is that from the start it has been directed mainly by the Pentagon — to include work on political and economic reconstruction.
Rumsfeld said it was well understood within the Bush administration that although Bremer will continue reporting to Rumsfeld for the time being, eventually the Iraq effort "will migrate over to the Department of State."
Some observers say the White House's move to shift focus away from Rumsfeld is not about assigning him a diminished role, but about the need to have other voices speaking for President Bush, a key factor now that Congress is considering the president's $87 billion budget request for Iraq and Afghanistan.
"The Pentagon is good at fighting wars, but not necessarily at persuading people about them," Heritage Foundation analyst Jim Phillips said. "But (Rumsfeld) will be one of the voices, and one of the most important voices. The Pentagon is going to have to be very closely involved in it. They have the logistical muscle to move things around that other agencies don't have."
James McCormick, political science professor at Iowa State University, said the White House was clearly trying to regain control over decision-making processes that had "meandered" to the Defense Department.
"They want to make sure they get their story straight as to what they're trying to accomplish," McCormick said. "(Rumsfeld) is certainly going to make his voice known. But there's nothing at this moment to lead me to say he's at odds with what the White House is trying to do."
Yet even before this development, Rumsfeld was under scrutiny for Bush's ever-evolving Iraq policy. He was halfway around the world — in Iraq, actually — when Secretary of State Colin Powell went to the United Nations in search of more postwar support.
When criticisms began to echo that the post-combat environment in Iraq had become too expensive and too deadly for American troops, Rumsfeld defended his approach on the editorial pages of major newspapers. He called the campaign under way in Iraq an innovative exercise in nation-building and predicted it would succeed in the end.
But on Wednesday it was Rice who was defending Bush's Iraq policy, in a speech in Chicago, while Rumsfeld watched a rapid-reaction force exercise with the NATO defense ministers.
At the White House, spokesman Scott McClellan gave Rumsfeld a vote of confidence.
"He's doing an outstanding job," McClellan said.