News of the letter broke as polls were closing in local and European elections in which Labour, in power for 12 years, was expected to suffer heavy losses at the hands of the centre-right opposition Conservatives.

Brown only found out about Purnell's resignation at about the same time that he went public with the news, according to Brown's spokesman.

The spokesman said Brown was disappointed by the news but  would focus on restructuring the government to guide the economy through the global economic downturn and rebuild trust in parliament, which has been tarnished by the scandal over politicians' perks.

'Paralysed government'

Meanwhile, the opposition Conservatives renewed their call for an immediate national election.

"It's clear that we have a completely paralysed government at the moment," George Osborne, the Conservative economics spokesman, told Sky News.

Purnell's move comes as many Labour members of parliament are said to be backing calls for Brown's departure.

Reports said up to 75 Labour MPs - around a fifth of the total - were ready to sign a letter calling on Brown to go although none had been identified yet.

In recent weeks, Labour and the other main parties have all been damaged by reports of MPs abusing their expense accounts.

Jacqui Smith, the interior minister, was the first to announce that she was quitting over the scandal. Hazel Blears, another minister, followed suit.

The revelations have sparked outrage among taxpayers.

Many Britons are furious that many members of parliament have milked the expenses system, claiming from taxpayers the cost of everything from dog food to cleaning their swimming pools at a time when many people are struggling in a recession.