George Smitherman's bid to become Toronto's mayor is facing its first major setback as the campaign's influential manager announced his resignation.

Jeff Bangs, a well-known Conservative strategist who has worked on a number of high-profile political campaigns, is resigning to spend more time with his family, according to a statement released by Smitherman's campaign office.

But insiders tell CTV Toronto that there has been tension brewing between leaders in the campaign for some time.

Still, the news of Bangs' sudden departure came as a surprise to political watchers. Smitherman's campaign office made the announcement at around 10 p.m. Friday.

Smitherman said in the statement that he "understands and supports" Bangs' decision, especially considering he himself has just adopted a little boy.

"I want to thank Jeff Bangs for his incredible contribution to my campaign -- specifically his efforts at pulling together a highly talented, professional and multi-partisan team who all share in my love of our city," he said.

"All of us in public life understand what a drain on one's personal life a campaign can be. This one has already been as long as three provincial election campaigns," the statement went on to say.

Smitherman refused to comment on the matter further on Saturday.

But sources told CTV Toronto that Bangs did not see eye-to-eye with Conservative backroom organizer Jamie Watt, another leader on Smitherman's campaign team.

Both men were heavily involved in former Ontario premier Mike Harris' administration, holding several key positions.

Bangs -- a partner at Pathway Group, a public affairs firm that specializes in government relations -- has long been widely respected among provincial political circles and was chosen to lead John Tory's provincial leadership campaign in 2004.

But sources close to the campaign say Bangs felt elbowed out of the decision process as the top man in Smitherman's campaign.

Nelson Wiseman, a political science expert at the University of Toronto, said the abrupt move could spell trouble for Smitherman's mayoral bid.

"It doesn't bode well for Smitherman because it suggests divisions within his camp," he said. "It can pose serious problems because he's got a big, formidable campaign. He's the front-runner and he's got a lot of resources mobilized and this suggests things are not going all that well."

Smitherman's opponent Rocco Rossi refused to comment on the situation, dismissing it as an internal matter. But Sarah Thompson, a magazine publisher also vying for the city's top job, said the timing of the announcement is suspicious.

"Well I think something must have happened, usually when it's the dead of the night, there is some anger and tension involved," she said.

Smitheman, who stepped down from his post as a senior cabinet minister for the Ontario Liberals to run for mayor, said a new campaign manager will be named shortly.

The municipal election will take place in October.

With files from CTV Toronto's Austin Delaney