"He's used sparingly but by using him, a Bannon acolyte, was done to send clear sent a message that Bannon was officially out", said a former Trump campaign aide.
He also compared Mr. Trump to that of former President Theodore Roosevelt.
Bannon joined Breitbart in 2012 and helped raise the profile of the news site, which he once called the platform for the so-called alt-right, a loose confederation of neo-Nazis, white supremacists and anti-Semites.
Bannon sought to make amends in a statement on Sunday, but a White House spokesperson said it didn't change his standing with the president.
The announcement completes what has been a shockingly fast fall from power for Bannon, who had hoped to use Breitbart, in concert with a new political action committee, to fund insurgent conservative challengers to mainstream Republicans in 2018 congressional races.
Bannon has also lost his talk show on SiriusXM radio, the company said on Tuesday.
"I'm proud of what the Breitbart team has accomplished in so short a period of time in building out a world-class news platform", Bannon said in a statement cited by Breitbart News. From there, he followed Trump to the White House, serving as chief strategist for much of 2017 before being ousted and returning to Breitbart.
Bannon did not immediately respond to a request for comment from Reuters.
The Wall Street Journal separately reported that Breitbart's board members were debating whether or not to oust Bannon, and last Thursday afternoon Rebekah Mercer, the conservative mega-donor who owns a stake in Breitbart, publicly rebuked Bannon in a rare public statement.
Trump has lashed out at Bannon for comments made in an explosive new book that questions the president's fitness for office.