Bannon and Kushner had been allies during the campaign but their relationship has soured over a growing ideological divide, sources say. Bannon's signature nationalist views have at times clashed with the globalist inclinations of Kushner, who has also previously identified as a Democrat.
On Friday, after the China summit had concluded in Mar-a-Lago, Kushner and Bannon sat down face to face for a meeting organized and attended by Priebus, senior administration officials told ABC News. The session was an attempt to smooth things over, get on the same page and move forward on President Trump's agenda, the officials said.
Multiple White House officials said Bannon had threatened to resign over the effective demotion, a warning that sources said "stunned" the president. But to ABC News, Bannon flatly denied the reports, calling them "absurd."
The weeklong episode has raised the prospect of a shake-up in the West Wing.
The president is said to be considering making staff changes, but specific moves or timing have not been discussed and nothing appears imminent, several sources tell ABC News.
Asked this week about his staff and a possible reboot, Trump told reporters on Air Force One: "I think we have shaken things up, but I think we've had one of the most successful 13 weeks in the history of the presidency."
Publicly, White House staff deny that the rumors of a major overhaul amount to anything more than that -- rumors.
"These reports are as absurd as all of the other erroneous gossip columns that have preceded them," assistant press secretary Michael Short told ABC News.