Peter Hain, Secretary of State for Work and Pensions, has resigned over his failure to declare £103,000 in party donations.
Hain says he stands down so he could “clear my name” as the Electoral Commission involces the police.
Shadow Work and Pensions Secretary Chris Grayling has described the resignation as "inevitable" and "the right thing" to do.
He says Gordon Brown must "take rapid action to restore effective leadership to a department that has clearly been distracted by the events of the last few weeks."
The news follows calls from Welsh nationalist party Plaid Cymru earlier this month for Hain to resign.
Brown defended Hain on ITV's News at Ten, saying: "It was a mistake that was made. It was an incompetence that he has readily admitted to."
Hain joined the Cabinet in June last year, replacing Joh Hutton in Brown's staff reshuffle.
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