Shanahan had been under investigation by the Pentagon inspector general for allegedly seeking preferential treatment of Boeing while at the Defense Department but he was cleared of wrongdoing in April. He has been acting defence secretary since January, the longest in Pentagon history.

"Based upon his outstanding service to the country and his demonstrated ability to lead, President Trump intends to nominate Patrick M. Shanahan to be the secretary of defence," White House spokeswoman Sarah Sanders said in a statement.

Early tests for Shanahan will include handling growing tensions with Iran, renewed missile tests by North Korea and questions about how the United States should handle the political and economic crisis in Venezuela.

Shanahan said in a statement that he was committed to modernizing U.S. military forces and if confirmed would aggressively implement Trump's national defence strategy which prioritises competition with China and Russia over the counterinsurgency wars that have consumed the Pentagon for much of the past two decades.