David Laws, Britain's chief treasury secretary, has resigned after admitting he claimed tens of thousands of dollars from taxpayers to rent rooms in homes owned by his long-term partner.
Laws announced his resignation on Saturday after apologising for channeling what the UK's Daily Telegraph reported to be £40,000 (over $57,000) to James Lundie, saying he would immediately pay back the money.
"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," Laws said at a press conference in London.
Laws, a millionaire former banker and member of the Liberal Democrat junior coalition partners, said he had not disclosed the financial arrangement because of "my desire to keep my sexuality secret".
"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," Laws said.
In a letter accepting the resignation of a man he appointed less than three weeks ago, David Cameron, the UK's prime minister, described Laws as a "good and honourable man" and said he hoped he could return to the government one day as he had "a huge amount to offer our country".
The Daily Telegraph reported that 44-year-old Laws claimed up to £950 a month for five years to rent a room in two properties owned by Lundie, a lobbyist.
Parliamentary rules have banned politicians from leasing accommodation from spouses, family members or a "partner'' since 2006.
In a statement immediately following the revelations, Laws said he did not consider himself to be in breach of the rules on expenses as he and Lundie had separate bank accounts and separate social lives.
Laws, a virtual unknown outside Westminster before the election, had one of the highest-profile roles in the new government whose priority is to reduce Britain's record 2009-2010 deficit of £156.1bn.
Laws' role made him deputy to George Osborne, the chancellor of the exchequer of the Conservative party, at the Treasury.
He and Osborne this week unveiled spending cuts worth £6.25bn.
Laws successor will be Danny Alexander, another Liberal Democrat, who was formerly the minister responsible for Scotland, Downing Street said.
Cameron has promised to crack down on politicians' abuse of expenses.
Britain's first coalition government since the second World War emerged from the indecisive May 6 general election.