Bannon had been given the authority to participate in National Security Council Principals Committee meetings after Trump signed an executive memorandum in January. At the time, some experts called the move an unprecedented political appointment to the panel.
Bannon, a former Breitbart News executive, had no objections to his removal, a source familiar with the decision told ABC News.
Michael Flynn was forced to resign from his position in February after he admitted to misleading Trump administration officials on the nature of multiple phone calls with the Russian ambassador to the United States before Trump's inauguration.
The removal of Bannon comes as part of a makeover of the NSC led by Flynn's national security adviser replacement, Army Lt. Gen. H.R. McMaster. The positions of energy secretary (Rick Perry), director of national intelligence (Dan Coats), CIA director (Mike Pompeo) and chairman of the Joint Chiefs of Staff (Marine Corps Gen. Joseph Dunford) were added to the principals committee as "regular attendees."
The moves shift the NSC's structure closer to how it operated under President Obama. The omission of the positions added today was controversial under Flynn's original organization.
Also changing is the role of the national security adviser itself with McMaster consolidating responsibilities under his position.
Within the prior organization, both the national security adviser and homeland security adviser were co-equals on the NSC principals committee. Each adviser had the power to convene or chair a meeting, under the new organization, the national security adviser is the primary chair, with the ability to delegate to the homeland security adviser.