By Kim Dixon and Thomas Ferraro

WASHINGTON (Reuters) - Senator Jim DeMint, a leading voice in the modern American conservative movement who has riled fellow Republicans as well as Democrats, surprised both parties on Thursday by declaring he was retiring from the chamber to head a conservative think tank.

DeMint's announcement came two days after he won praise from hard-liners by ripping into the top Republican, Speaker of the House of Representatives John Boehner.

The 61-year-old South Carolinian, who preaches the value of small government and freely criticizes fellow Republicans, blasted Boehner for violating a long-time party taboo: proposing increased revenue as part of a deficit-reduction plan.

"This isn't rocket science," DeMint said. "Everyone knows that when you take money out of the economy (with tax hikes) it destroys jobs."

DeMint's departure in January is not expected to affect the balance of power in the Senate, which Democrats are set to control next year, 53-47.

South Carolina Governor Nikki Haley appears certain to appoint a fellow Republican to replace DeMint through 2014, when a special election will be held.

A senior Republican speculated that Haley, seen as a rising star, will choose either Tim Scott or Michael Mulvaney, who represent South Carolina in the House of Representatives, and perhaps run for the Senate seat herself in 2014.

DeMint was first elected to the Senate in 2004 after six years in the House of Representatives.

In many ways, he has seemed ahead of his time in the Senate with his small-government views, which became more popular in recent years with the rise of the anti-Washington Tea Party movement.

That movement suffered some big losses in last month's election, however, when President Barack Obama won a second term and DeMint's Republicans failed to win back the Senate.

Last year, DeMint was a founder of the Senate Tea Party Caucus, which now has four members. Three more Tea Party favorites were elected to the Senate.

With his uncompromising style, DeMint has often single-handedly tied the Senate in knots by raising objections to a host of measures to increase the scope of government.

Resulting gridlock fanned by DeMint and others on both sides of the political aisle contributed to record low approval ratings for Congress at or near single digits.

PARTISAN BICKERING

"I'm leaving the Senate now, but I'm not leaving the fight," DeMint said in a statement. "I've decided to join The Heritage Foundation at a time when the conservative movement needs strong leadership in the battle of ideas."

Founded in 1973, the Heritage Foundation, a few blocks from the U.S. Capitol, is one of the nation's leading think tanks. With 700,000 members, it has helped shape the debate in Washington for years.

The Senate has long been known as "the world's most deliberative body." But in recent years, the gridlock has made it more frustrating and less attractive. Continued...