During an appearance in the Oval Office, Trump confirmed to reporters he'd accepted Haley's resignation and said she's expected to leave the administration "at the end of the year".
"I'm not sure there's anyone more competent in the world", he added.
Trump's administration has seen numerous departures since he entered the White House, but his national security and foreign policy circle has witnessed a particularly high level of turnover.
Trump said there are "many good people" who want the position at the United Nations and said he and Haley would be looking at who he will select for her successor.
Sanford, a fellow former SC governor who has been allies with Haley in the past but is now an administration critic, said of the story: "Something doesn't smell right". Haley will serve until the end of the year, he said. Mr Trump subsequently tweeted that "the people of SC are embarrassed by Nikki Haley".
BBC New York correspondent Nick Bryant said Mrs Haley had formed a partnership with UN General Secretary Antonio Guterres to protect the UN against Mr Trump's anti-globalist agenda. Haley's debts include a string of liabilities incurred over her years in the Trump administration and S.C. government.
Duke and Duchess of Sussex visited Chichester, Bognor, Brighton and Peacehaven
They were full of smiles as they interacted with crowds of people awaiting their arrival at Chichester in West Sussex. The duke and the US-born former actress saw a rare copy of the American Declaration of Independence at Edes House.
But, despite it all, US Ambassador to the United Nations Nikki Haley chose to call it quits and resign on Tuesday.
"No, I am not running in 2020", she said.
Democrats and health care advocates often criticize her refusal to expand Medicaid in SC through the Affordable Care Act during her time in the governor's mansion.
"Before she was named by Trump to her United Nations post, Haley was elected the first female governor of SC".
Last year, Nikki Haley and husband, Michael Haley, took on more than $1 million in mortgage debt for an investment-rental property, the 2017 disclosure shows.
She was also instrumental in pressuring China to support a tough sanctions regime against North Korea.
It's the latest shake-up in the turbulent Trump administration just weeks before the November midterm election.
"She got to know the players, she got to know China, Russia, and India.they like her...they respect her".