David Cameron has confirmed his communications chief Andy Coulson felt compelled to resign because of "pressures on him and his family".
Mr Coulson, a former editor of the News of the World, said continued coverage of events connected to his old job made it difficult for him to "give 110%" to the role.
He had come under fire over allegations his reporters hacked the mobile phones of public figures.
Mr Coulson was editor at the time but has always denied knowing about the practice.
"I stand by what I've said about those events but when the spokesman needs a spokesman it's time to move on," he said in a statement.
He confirmed he would leave within the next few weeks and praised Mr Cameron, his family and team.
It is understood he told the Prime Minister on Wednesday that he wanted to leave the job.
The Prime Minister said he was "very sorry" Mr Coulson had quit but he understood why he did so.
"Andy has told me that the focus on him was impeding his ability to do his job and was starting to prove a distraction for the Government," Mr Cameron said.
"During his time working for me, Andy has carried out his role with complete professionalism.
"He has been a brilliant member of my team and has thrown himself at the job with skill and dedication."
Mr Cameron said his ex-communications director could be "extremely proud of the role he has played".
An MP called on the Prime Minister to come to the Commons and make a statement about thie resignation.
Denis MacShane suggested the Government was seeking to "bury" the news on a busy day, as former prime minister Tony Blair is giving evidence to the Iraq war inquiry.
Mr Coulson joined Mr Cameron's team before the General Election and then ran the PM's communications strategy.
A No 10 spokeswoman told reporters earlier: "The Prime Minister has had full confidence in Mr Coulson and still does."
In 2007, the former journalist quit the News of the World when reporter Clive Goodman and private investigator Glenn Mulcaire were jailed for phone-hacking.
He said he took responsibility for it happening on his watch but denied knowing about it.
Actress Sienna Miller has begun civil legal action against the paper, alleging her phone was hacked, and it is understood to be documents disclosed by her team that has led to new developments.
News of the World executive editor Ian Edmondson was suspended by the paper recently in connection with the investigation.
Source - Yahoo.