Twitter co-founder Jack Dorsey is returning to the microblogging company to oversee product development, even as one of Twitter's other founding members cuts back his involvement, the company said on Monday.

Dorsey, who co-founded Twitter in 2006 along with Evan Williams and Biz Stone, and served as its first CEO until being replaced by Williams in 2008, will become Twitter's executive chairman, the company said on Monday.

Dorsey will also remain chief executive of Square, a separate mobile payment start-up that has also based in San Francisco.

The move represents the latest shuffle among the creators of the popular Web service, which has more than 200 million registered accounts and has been valued at nearly $8 billion by investors buying shares of the privately-held company in the secondary market.

In his new role, Dorsey will return to Twitter in an everyday role to lead our product development, the company said.

Dorsey's role focusing on products comes about six months after Williams stepped down from the CEO job -- handing the reins to Dick Costolo -- so he could be completely focused on product strategy, the company said at the time.

Twitter spokesman Matt Graves said in an emailed statement on Monday that Williams decided a couple of months ago to be less involved day to day at Twitter.

Williams currently serves as a key advisor to the company, said Graves.

He continues to have a close relationship with the company providing strategic advice and, of course, he remains an active board member, Graves said.

Twitter, which allows people to send 140-character text messages, or Tweets, to groups of so-called followers, is one of the Web's most popular social networking services, along with Facebook and Zynga.

The service has become a popular communications tool for celebrities, politicians and businesses, and has played a role in several geopolitical events, such as recent uprisings in the middle east.

In December Twitter was valued at $3.7 billion in a $200 million funding round led by venture capital firm Kleiner Perkins Caufield & Byers. An auction of Twitter shares on the secondary market earlier this month, suggested investors were valuing the shares at $7.7 billion.

Square, the mobile payment company that Dorsey co-founded in 2009, said in a statement that it would remain Dorsey's top priority.

(Reporting by Alexei Oreskovic; editing by Richard Chang and Andre Grenon)

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