Yahoo’s Thompson Out; Levinsohn In

Yahoo’s embattled CEO Scott Thompson (pictured here) is set to step down from his job at the Silicon Valley Internet giant, in what will be a dramatic end to a controversy over a fake computer science degree that he had on his bio, according to multiple sources close to the situation told AllthingsD.

The pair will apparently say he is leaving for “personal reasons.” Sources said that Thompson will be claiming to be leaving due to a serious illness that he recently discovered he had.

But the evolving crisis — which is just over a week old — centered on his botched resume, and how he handled the thorny issue is clearly the key reason for the abrupt leaving.

Thompson’s likely replacement on an interim basis will be Yahoo’s global media head Ross Levinsohn, who most recently also ran its Americas unit, including its advertising sales.

In addition to the management upheaval, Yahoo’s board is closing in on a settlement with the man who discovered Thompson’s misstep, activist shareholder Daniel Loeb of Third Point, said sources.

The situation could change, since Yahoo’s full board still has to meet this morning to officially approve the sweeping changes at the long-troubled company.