Earlier in the day, Bunye said in an interview that Lina has resigned to return to his long-time pursuit of community organizing.
He denied rumors that Lina quit because the Arroyo administration refused to back his bid for governor of Laguna.
"Of course we respect his decision, and he said that for the meantime he wants to take a break but eventually he would like to go back to community organizing," Bunye said.
Bunye later clarified that Lina was staying. His earlier statement was based on an erroneous statement issued by President Arroyo’s campaign spokesman, Housing Secretary Michael Defensor.
President Arroyo said she has spoken with Lina but did not discuss the resignation in detail.
"We did not talk much about that so we will talk again later and then I will issue a statement," Mrs. Arroyo said in a radio interview.
Malacañang sources said Lina tendered his resignation last month but Mrs. Arroyo did not act on it. Lina also had a minor clash with the Palace over his replacement, the sources added.
But Lina denied in an interview having had a clash with the Palace and laughingly said "amen" to "whatever Malacañang says" when he was told about Bunye’s statement.
Presidential Adviser for Special Concerns Norberto Gonzalez was reportedly being tapped but Lina wanted someone from the department to get the job, the sources said.
Bunye said a senior undersecretary of the department will most likely take Lina’s place. "There will be an officer in charge and most probably a senior undersecretary will be the office in charge in the meantime," he said.
Lina was reportedly eyed to replace former justice secretary Simeon Datumanong, who resigned last month to run again for congressman of his native Maguindanao. He was replaced by Justice Undersecretary Merceditas Gutierrez.
Also last month, Trade Secretary Manuel Roxas II and National Security Adviser Roilo Golez resigned to run in the May congressional elections.
A former senator and Laguna governor, Lina was appointed interior secretary by Mrs. Arroyo in 2001.
He spearheaded Mrs. Arroyo’s campaign against illegal gambling, particularly jueteng, over which several police chiefs were sacked last year for failing to curb the illegal lotteries.