The Northern Ireland Secretary Peter Mandelson has resigned following renewed accusations of sleaze.

His shock resignation followed a two-hour meeting with Tony Blair who called in the high profile cabinet minister in a bid to get the facts surrounding accusations that he made representations for a passport to the Home Office on behalf of Srichand Hinduja - the Indian millionaire who funded the millennium dome's faith zone.

He said he wanted "to lead a more normal life" but denied that he was guilty of any wrongdoing. The move signals the end of his career - effectively making it impossible for him to play any role, either front of house or behind the scenes in Labour politics.

The Northern Ireland secretary was today accused of giving a misleading account of the situation concerning the passport claims - initially suggesting he had not called Mike O'Brien, the home office minister who was then responsible for passport applications.

On Sunday, Mandelson issued a statement in which he claimed it was his private secretary who had made the representation to the Home Office.

Earlier today, the prime minister's official spokesman refused to confirm or deny whether the controversial minister would remain in post - although the spokesman made it clear that he believed Mandelson had earlier misled Number 10 over the passport claims.

Mandelson, who resigned in 1998 following revelations that he had taken a £373,000 loan from the former paymaster general Geoffrey Robinson, is a close ally of the prime minister but remained an unpopular figure within party ranks.

Said one Labour source: "Another minister may have survived this. But Peter's only friend is Tony - and even that wasn't enough in the circumstances."

Labour backbencher Peter Snape, who had earlier called for a quick decision, said Mandelson was the architect of his own downfall. "It's an embarrassment for the prime minister - it is unfortunate to say the least. Like all successful men, he [Mandelson] has made enemies at Westminster. The problem is that he doesn't have many friends here."

Mandelson will face the Commons this afternoon for a session of Northern Ireland questions - his last ever.