WASHINGTON, July 17 — The head of the Department of Veterans Affairs resigned Tuesday after serving two and a half years, a term marred by budget shortfalls and the theft of personal data from millions of veterans.

The official, Jim Nicholson, the secretary of veterans affairs, said in a statement that he was ready to step down as the chief of the nation's largest health care system and return to the private sector, especially as he approached his 70th birthday.

"It was not an easy decision," said Mr. Nicholson, a Vietnam veteran. "I care for veterans. That's why I took this job."

He said he was proud that his leadership had resulted in establishing electronic medical records for all of the nearly eight million people in the V.A. health care program.

The White House press secretary, Tony Snow, said Mr. Nicholson "certainly could have served longer if he had so desired." In a statement, President Bush said Mr. Nicholson should be proud of his service, both at the V.A. and in an earlier posting as ambassador to the Vatican.

The veterans' agency drew embarrassing publicity last year under Mr. Nicholson when thieves took a laptop computer from the home of an employee that held personal data including the names, birth dates and Social Security numbers of millions of Navy and National Guard veterans discharged since 1975. The Federal Bureau of Investigation later determined that the information had not been compromised.

Mr. Nicholson said Tuesday that the uproar over the theft resulted in a reorganization, and that this "has really changed the way we do business in this huge agency," adding, "I feel very good about it."

Bob Wallace, executive director of Veterans of Foreign Wars, described Mr. Nicholson's time on the job as "kind of rough."

"He came to the job with no real experience about what Veterans Affairs was about," Mr. Wallace said. "I thought that was very positive because I thought that would mean he would ask a lot of questions and delve into things." But Mr. Wallace said Mr. Nicholson's unfamiliarity with how the department worked "overcame" him, adding that he "was gradually getting there" by the end of his tenure.

Senator Daniel K. Akaka, Democrat of Hawaii and chairman of the Senate Committee on Veterans' Affairs, said Tuesday that he had to work with Mr. Nicholson "during some challenging times, including an underfunded V.A. during his early tenure in office" but that the secretary was "willing to work with the committee and the Congress on behalf of our nation's veterans."

Senator Larry E. Craig of Idaho, the ranking Republican on that committee, said Mr. Nicholson "leaves behind a proud record of accomplishment for the nation's 24.5 million veterans." He said that Mr. Nicholson had also sought to improve care for veterans with brain injuries and post-traumatic stress disorder, had hired more outreach coordinators to ensure returning veterans get necessary treatments and had approved more than 80 new community clinics around the country.

Bobby Muller, the president of Veterans for America, said his organization welcomed Mr. Nicholson's resignation and called him a product of "political patronage." Every year Mr. Nicholson has been secretary, Mr. Muller said, the department has had to request emergency supplemental financing from Congress to handle its wartime caseload.

The department, with a staff of 235,000, operates 155 medical centers and more than 1,400 treatment centers, and in 2006 provided health care to almost 5.5 million people.

http://www.nytimes.com/2007/07/18/washington/18nicholson.html?ex=1186027200&en=d85989c53e514603&ei=5070