British Immigration Minister Beverley Hughes resigned on Thursday after officials exposed lax controls which allowed migrants from Romania and Bulgaria to enter the country with forged papers.
Prime Minister Tony Blair's spokesman said Hughes, 54, had quit for "unwittingly" misleading parliament over the affair after days of media and political attacks.
Immigration is set to be a key issue at the next election, expected in the first half of next year, with Blair keen to counter opposition claims that his government is too liberal in allowing asylum seekers and new immigrants into Britain.
Hughes was replaced by Des Browne, a junior minister in the Work and Pensions department, indicating that any consequent ministerial reshuffle will not spill over to major government figures. Analysts said Blair himself was unlikely to suffer any political damage from the affair.
Hughes, who was elected to parliament in 1997 when Blair was swept to power, tendered her resignation on Wednesday night.
"Nothing is more important than my integrity and while I did not intentionally mislead anyone, I have decided that I cannot in conscience continue to serve as immigration minister," she told parliament in a resignation statement on Thursday.
Blair later told his monthly news conference she had behaved with "integrity" and a "great deal of courage".
It was unclear whether Hughes had jumped or was pushed although she received strong backing from her boss, Home Secretary David Blunkett, and Blair this week.
The government was plunged into a bitter row this week after a senior British diplomat in Romania claimed that cases, some bogus, had been rushed through to clear backlogs in the system.
Blunkett has suspended all immigration applications from Romania and Bulgaria pending an investigation.
His role will now come under fire but Blair brushed aside suggestions that Blunkett too should resign.
The diplomat who exposed the shortcomings, British Consul in Romania James Cameron, has been suspended.
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