Wirral West MP Stephen Hesford, has stepped down as parliamentary private secretary to minister Vera Baird following the scandal that she employed an illegal immigrant.
Lady Scotland was fined £5,000 for breaching employment laws when it was revealed she had failed to take photocopies of documents shown to her by her housekeeper, who was working illegally.
In a letter to the Prime Minister, Wirral West MP Stephen Hesford said: "My decision comes about because as an aide to the Law Officers, whilst I have great personal regard for the Attorney General, I cannot support the decision which allows her to remain in office."
Lady Scotland apologised for what she called a "technical breach" and said she accepted the fine. She claimed that it had been an administrative error "like driving into the City and not paying the congestion charge".
The UK Border Agency said Baroness Scotland had taken steps to check Tongan Loloahi Tapui's right to work but had not kept a copy of documents, as required by law.
The Tories described her as "breathtakingly complacent" and Mr Hesford said: "In my view the facts of the case do not matter.
"It is the principle which counts, particularly at a time when the public's trust of Whitehall is uncertain to say the least.
"We have to be seen to be accountable."
Responding to Mr Hesford's resignation, the Prime Minister said: "We need to put this in proper perspective: it is a serious offence to work illegally in the UK but Baroness Scotland acted in good faith.
Gordon Brown said: "She has apologised. I take this very seriously, but the facts show she was mislead by her employee.
"If Baroness Scotland had wilfully or knowingly employed any illegal worker, then obviously she wouldn't be in her post."
Stephen Hesford, MP for Wirral West, has revealed he found out about the scandal surrounding Baroness Scotland while he was watching television.
Speaking from his constituency office in Upton Village on Wirral he insisted his confidence in the labour party "remains unfaultering."
Mr Hesford, 52, said: "This was an incredibly difficult decision.
"Without a doubt one of the most difficult of my political career.
"The whole incident came as a total shock.
"Believe it or not, the first I knew of it was when I saw it on television.
"I went home and slept on the matter but decided I couldn't keep my post and maintain my own integrity.
"It's a simply matter of point and principle - I know there's not a huge amount of it about in politics at the moment.
"I have no intention whatsoever of leaving my position as MP for Wirral West.
"I am still incredibly proud to represent this constituency.
"Whilst I still have great personal respect for Baroness Scotland I do not feel able to support her while she remains in office.
"My faith in Gordon Brown and the Labour party remains unfaultering as ever but this came down to a simple matter of personal principle."
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