By Alex Stevenson
David Laws has resigned from the government after expenses claims relating to his boyfriend landlord stunned the coalition.
The senior Liberal Democrat has been in a secret relationship with James Lundie since 2001. He will immediately repay over £40,000 he had claimed from rent paid to Mr Lundie from 2001 to June 2007.
Parliamentary rules bar expense claims on rent from a partner or spouse. Mr Laws said he never viewed Mr Lundie as either of these.
"Although we were living together we did not treat each other as spouses - for example we do not share bank accounts and indeed have separate social lives," he said in a statement.
"However, I now accept that this was open to interpretation and will immediately pay back the costs of the rent and other housing costs I claimed from the time the rules changed until August 2009."
Mr Laws has referred himself to the parliamentary standards commissioner John Lyon.
Having been one of the five Lib Dem MPs in the coalition Cabinet, Mr Laws said he had informed both David Cameron and Nick Clegg, but it had been "his decision alone".
In his resignation letter to the prime minister, he wrote: "The last 24 hours have been very difficult and distressing for me, and I have been thinking carefully about what action I should take in the interests of the government, my constituents and - most important of all - those whom I love
"I am grateful for the strong support which I have received from my friends, family, and from you, the deputy prime minister and the chancellor. This support has been incredibly important, but nonetheless, I have decided that it is right to tender my resignation as chief secretary to the Treasury."
"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," he added.
Downing Street has announced Lib Dem Scottish Secretary Danny Alexander will take over the post of Chief Treasury secretary.
Mr Cameron responded to Mr Laws' resignation by saying: "The last 24 hours must have been extraordinarily difficult and painful for you.
"You are a good and honourable man. I am sure that, throughout, you have been motivated by wanting to protect your privacy rather than anything else.
"Your decision to resign from the government demonstrates the importance you attach to your integrity.
"In your short time at the Treasury, you have made a real difference, setting the government on the right path to tackle the deficit which poses such a risk to our economy."
Mr Clegg added: "I very much hope that when those questions are answered there will be an opportunity for him to rejoin the government, because, as everyone has seen in recent weeks, he has so much to contribute to national life.
"When all is said and done, this has come about because of David's intense desire to keep his own private life private. His privacy has now been cruelly shattered.
"I'm sure I speak on behalf of all fair-minded people when I say that I hope that David, and all those people close to him, will now be granted the privacy which he has always craved."
In an earlier statement Mr Laws said that he and Mr Lundie were "intensely private people" who had decided to keep their relationship private.
"Clearly that cannot now remain the case," he added in his statement.
"My motivation throughout has not been to maximise profit but to simply protect our privacy and my wish not to reveal my sexuality.
"However, I regret this situation deeply, accept that I should not have claimed my expenses in this way and apologise fully."
Mr Laws has been the MP for Yeovil since he replaced Paddy Ashdown in the seat in 1997. He was elevated to the Lib Dems' frontbench team in October 2002 and has already pushed through £6 billion of spending cuts since joining the Treasury under the Conservative-Lib Dem coalition.