David Laws has announced his resignation as chief secretary to the Treasury after newspaper reports about his expenses claims.
His resignation comes just weeks after he entered government for the first time as part of the coalition.
The Daily Telegraph broke the story that Laws, a Liberal Democrat MP, had claimed rent on expenses for a room in London flat owned by a man he was having a sexual relationship with.
This may have been in breach of Commons rules about renting accommodation from a spouse or partner.
In a letter to prime minister David Cameron, Laws said the last 24 hours have been "very difficult and distressing for me".
"I am grateful for the strong support which I have received from my friends, family, and from you, the deputy prime minister and the chancellor," he said.
"This support has been incredibly important, but nonetheless, I have decided that it is right to tender my resignation as chief secretary to the Treasury.
"I do not see how I can carry out my crucial work on the Budget and spending review while I have to deal with the private and public implications of recent revelations.
"I cannot now escape the conclusion that what I have done was in some way wrong, even though I did not gain any financial benefit from keeping my relationship secret in this way.
"Most importantly, I have an overriding responsibility to those I love most, and who I feel I have exposed to scrutiny in this way.
"I have pursued a political career because of my sense of public duty, but I have too often put this before the interests of those I love most. It is time to redress the balance."
Danny Alexander, another Lib Dem, is the new chief secretary.
Lib Dem backbencher Michael Moore is to join the cabinet in Alexander's old role as Scottish secretary.
Both prime minister Cameron and his deputy, Lib Dem leader Nick Clegg, have indicated that Laws will be welcomed back into government in the future.
"Your decision to resign from the government demonstrates the importance you attach to your integrity," Cameron said in a letter to Laws.
"In your short time at the Treasury, you have made a real difference, setting the government on the right path to tackle the deficit which poses such a risk to our economy.
"I hope that, in time, you will be able to serve again as I think it is absolutely clear that you have a huge amount to offer our country."
