In a statement, President Joe Biden said Tanden requested to withdraw her name from consideration.
"I have accepted Neera Tanden's request to withdraw her name from nomination for Director of the Office of Management and Budget," Biden said in a statement. "I have the utmost respect for her record of accomplishment, her experience and her counsel, and I look forward to having her serve in a role in my Administration. She will bring valuable perspective and insight to our work."
The former Clinton campaign aide and president of the left-leaning think tank Center for American Progress came under fire during the confirmation process for past critical comments of lawmakers on both sides of the aisle. The Washington Post first reported the White House's decision.
In a letter to Biden, Tanden said it was the "honor of a lifetime" to be considered for the role.
"I appreciate how hard you and your team at the White House has worked to win my confirmation. Unfortunately, it now seems clear that there is no path forward to gain confirmation, and I do not want continued consideration of my nomination to be a distraction from your other priorities," Tanden wrote.
Democratic Sen. Joe Manchin of West Virginia and Republican Sens. Susan Collins of Maine and Mitt Romney of Utah all said in recent weeks that they would oppose her confirmation, pointing to Tanden's past criticisms of lawmakers on social media.
Without Manchin's support, Tanden would have needed a Republican senator to vote in favor, and Collins was seen as a potential "yes" vote. Democrats hold a narrow majority in a 50-50 Senate with Vice President Kamala Harris able to cast tie-breaking votes in the chamber.
Tanden apologized and expressed regret over her past tweets during Senate confirmation hearings last month.
She appeared before the Senate Homeland Security Committee and apologized for some of the criticism she has previously directed at congressional Republicans and expressed regret over past tweets. Tanden later faced senators on the Budget Committee, including Sen. Bernie Sanders of Vermont, an independent who caucuses with Democrats, who said some of her past comments amounted to "vicious attacks made against progressives."
In the days after the election, Tanden also deleted more than 1,000 tweets from her personal account, some of which were reviewed by CNN's KFile.
Tanden would have led a key economic post that oversees the production of the President's proposed budget for his agenda if she had been confirmed.
The White House had remained steadily in support of Tanden for the role. Biden had said he did not intend to pull Tanden's nomination and that he believed they would find the votes to get her confirmed. Senate Majority Leader Chuck Schumer said Sunday he was working with Biden to gather the support needed to confirm Tanden.
After Manchin and Collins came out against Tanden's nomination, White House press secretary Jen Psaki released a statement in support of Tanden.
"Neera Tanden=accomplished policy expert, would be 1st Asian American woman to lead OMB, has lived experience having benefitted from a number of federal programs as a kid, looking ahead to the committee votes this week and continuing to work toward her confirmation," Psaki said in a tweet.
This is a breaking story and will be updated.