CHICAGO – President-elect Barack Obama said Thursday that he will resign from the Senate effective Sunday.

In a statement, the junior Illinois senator called his four-year term “one of the highest honors and privileges” of his life and said the people of Illinois will stay with him as he leaves the Senate to begin “the hard task of fulfilling the simple hopes and common dreams of all Americans as our nation’s next president.”

Under state law, Democratic Gov. Rod Blagojevich will name Obama’s replacement for the remaining two years of his term. Blagojevich has said he expects to make a decision by year’s end, and has ruled out appointing himself.

Obama’s resignation reduces the Democratic majority to a bare minimum for the post-election session that begins next week. The party retains control as long as Independent Sen. Joseph Lieberman of Connecticut sides with them.

Some Democrats favor punishing Lieberman, who endorsed McCain, for his speech at the Republican National Convention this summer and other critical remarks about Obama. Obama has told Senate Majority Leader Harry Reid he is not interested in seeing Democrats drive Lieberman from the Democratic caucus.

Blagojevich’s appointee would serve until the next national election in 2010.

Obama has made clear he’s deferring to the governor, saying last week: “This is the governor’s decision; it is not my decision.” However, Obama also said his replacement should be “somebody who is capable; somebody who is passionate about helping working families in Illinois meet their dreams.”

Potential candidates to replace Obama include Rep. Jesse Jackson Jr., Rep. Jan Schakowsky, Illinois Senate President Emil Jones and Illinois Attorney General Lisa Madigan.

On Tuesday, Obama appeared with another possible replacement, Iraq war veteran Tammy Duckworth, to commemorate Veterans Day. She is a former congressional candidate and head of the Illinois Department of Veterans Affairs.

Obama aides say his Senate office will remain open for a while so staffers can archive documents for his future presidential library and contact constituents. It will close within 60 days after Obama’s resignation Sunday.