Washington - President-elect Barack Obama called on Illinois Governor Rod Blagojevich to resign Wednesday following his arrest on corruption charges.

"The president-elect agrees ... that under the current circumstances it is difficult for the governor to effectively do his job and serve the people of Illinois," Robert Gibbs, Obama's spokesman, said.

Blagojevich was arrested Tuesday on multiple corruption charges, including that he sought bribes and political favours from those being considered to take Obama's vacated Senate seat.

Gibbs said Obama believes the Illinois state legislature should move to takeover the responsibility for replacing Obama in the Senate or hold a special election "to select a new senator that will have the trust and confidence of the people of Illinois."

Blagojevich remains governor and still has the power to appoint a new senator. Obama resigned his seat 12 days after winning the November 4 presidential election.

Obama on Tuesday said Blagojevich's arrest marked a "sad" day for his home state but refused to comment on the case. He denied having any knowledge of Blagojevich's activities.

Blagojevich was arrested outside his home and appeared in court before being released on bail. He returned to his job Wednesday. The Justice Department also charged his top aide, John Harris, with corruption.

Blagojevich, 51, and Harris, 46, were charged with conspiracy to commit mail and wire fraud and solicitation of bribery. They face maximum sentences of 20 years in prison if convicted.

Congressman Jesse Jackson Jr, the son of the civil rights activist of the same name, is among the contenders to replace Obama and was reportedly the subject of Blagojevich's conversations with Harris that were caught on tape by federal authorities.

Media reports have identified Jackson as "Candidate 5," the term used by the Justice Department in the affidavit to shield his identity because there was no evidence of wrongdoing.

Jackson addressed reporters on Wednesday and said he had been informed by authorities that he was not a target of the investigation and denied any contact between his staff or Blagojevich's about cutting a deal so he could take Obama's seat.

Jackson said he was "appalled" by the "shocking" and "stunning" charges against Blagojevich.

"I reject and denounce pay-to-play politics and had no involvement whatsoever in any wrongdoing," Jackson said, also calling on Blagojevich to step down.