Josh Simons has resigned as a Cabinet Office minister amid a row over a thinktank he used to run, which reportedly collected information on journalists.
Sir Keir Starmer recently confirmed he had asked his ethics adviser, Sir Laurie Magnus, to look into whether Mr Simons had broken the ministerial code.
Mr Simons said he had been cleared of breaking the code but said that by staying in office he had become a “distraction”.
It comes after claims the thinktank Labour Together, which Mr Simons ran before entering government, paid for a probe into the background of journalists who ran a negative story on the organisation.
Mr Simons said in his resignation letter that he “never sought to smear” some newspaper reporters.
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Labour Together was previously run by Morgan McSweeney, Sir Keir’s former chief of staff, and was closely associated with changes in the party following the departure of Jeremy Corbyn.
Mr Simons had been a minister in the Cabinet Office, working on areas such as the government’s digital ID scheme.
He faced calls to resign after Labour Together was accused of paying PR firm Apco Worldwide £36,000 to investigate the background of journalists.
In a letter to the prime minister, Sir Laurie said the ex-minister now accepted the terms he agreed with Apco were “wider than he had understood” and he had acted “too hastily in confirming their appointment”.
While Sir Laurie said Mr Simons had acted “in good faith”, he said the MP acknowledged the “perceived gap between his public statements and what he now accepts appears to be a more extensive scope has been damaging”.
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Sir Laurie added: “I see no basis for advising you of any breach of the ministerial code by Mr Simons but you will wish to consider, in the light of this distraction and potential reputational damage, whether he continues to hold your confidence as a member of your government.”
Sir Keir Starmer said he has accepted “with sadness” Mr Simons’ resignation.
Conservative shadow minister Alex Burghart said the prime minister should have sacked Mr Simons last week as it was “clear as day that he had done wrong”, and called for a “full investigation” into Labour Together.
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