Defence Secretary Liam Fox has quit over his relationship with self-styled advisor Adam Werrity.
His resignation comes after a week of intense speculation about his dealings with his former flat-mate
Mr Werrity accompanied the Secretary of State for Defence on 18 foreign trips, despite having no official role. He had also handed out business cards claiming to be an advisor to Dr Fox.
In a letter to Prime Minister David Cameron, the top MOD official said he had "mistakenly allowed" his personal and professional life to become "blurred".
Mr Cameron responded by saying he did a "superb job" but "understood his reasons" for resigning.
Shadow defence secretary Jim Murphy, who had been very vocal in calling for an inquiry into Fox and Werrity's relationship, has called Fox's resignation "unavoidable and inevitable".
He said: "Governments must have rules and ministers must have standards.
"Liam Fox fell foul of the standards and he broke the rules. It was clear early on that he had breached the Ministerial Code."
The former Secretary of State's supporters had hoped he would stay in office until a full report into his conduct by Cabinet Secretary Gus O'Donnell was published.
But Mr Fox said about his dealings with Adam Werrity in his resignation letter: "The consequences have become clearer in recent days.
"I am very sorry for this.
"I have also repeatedly said that the national interest must always come before personal interest.
"I now have to hold myself to my own standard. I have therefore decided, with great sadness, to resign from my post as secretary of state for defence."
Mr Werrity, a lobbyist, became friends with Liam Fox in the late 1990s.
Fox was an Opposition Front Bench Spokesman on Scotland and Constitutional Affairs when Werritty was studying public policy at Edinburgh University.
Werritty was best man at his wedding in 2005.
The property in which Werrity stayed rent free was mortgaged at £1400 per month and covered by Fox's Additional Costs Allowance, which is part of his MP's expenses.
The allegations of improper conduct have been hard-hitting but a wealthy donor and several other backers claim they raised funds to pay for Werrity's advisory role.
The full inquiry report is expected to be published by Mr O'Donnell on 21st October.
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