Labour MP Shahid Malik has stepped down as justice minister pending an inquiry into claims about his expenses made in the Daily Telegraph.
Standards chief Sir Philip Mawer will investigated claims he failed to declare a subsidised rent.
Mr Malik insists he did not breach the ministerial code and he was "pleased" to have the chance to clear his name.
The MP - who is the biggest casualty yet of the expenses scandal - called for the media "bloodfest" to stop.
Prime Minister Gordon Brown has asked Sir Philip, his official adviser on ministerial interests, to investigate the claims as quickly as possible and his report could come within days.
Mr Brown's spokesman stressed the expectation would be that Mr Malik would return to office if he was cleared and said no replacement was being appointed in the meantime.
There is no suggestion Mr Malik broke Parliamentary rules on expenses but it his conduct as a minister which is under scrutiny.
The Daily Telegraph alleges he claimed the maximum amount allowable - £66,827 over three years - on his second home in London - but obtained a discounted rent of £100 a week on his main family home in his Dewsbury constituency, which he paid out of his own pocket.
The thirst for blood from some elements of the media just seems like it's unstoppable
Shahid Malik, Labour MP
Many MPs 'considered resigning'
Key details: MP expenses claims
Calls to prosecute expenses MPs
Mr Malik has described the claim about his rent as a "fabrication".
But Mr Brown's spokesman said it had to be investigated because, if true, it would represent a "potential financial benefit" that had not been part of Mr Malik's ministerial declaration and "this could represent a breach of the ministerial code".
It comes amid a rising tide of public anger at MPs from all parties, with former police chief Ray Mallon, now independent mayor of Middlesbrough, urging criminal investigations into some expenses claims and the Daily Mail launching a campaign to mount private prosecutions.
The scandal claimed its first victims on Thursday, with Labour former minister Elliot Morley being suspended pending an investigation into his expenses and Tory Parliamentary aide Andrew McKay quitting his post.
But opinion polling - and the barracking of MPs in the street and on BBC One's Question Time - suggest politicians face an uphill struggle to restore trust.
Conservative MP David Davies said he believed many MPs are considering quitting even if they have done nothing wrong as they feared they would be seen as "a thief on the make".
Margaret Beckett and Sir Menzies Campbell were heckled about claims on Question Time
"This whole thing has completely undermined the reputation generally of every single MP," the Monmouth MP told BBC Radio Wales.
"A lot of people are saying 'What's it all about, should we get out, have I had enough?'
"And I think a lot of them will find the public will be helpful in pushing them in that direction anyway."
Less than an hour before his resignation was announced, Mr Malik went on the offensive to claim endless media stories about expenses were in danger of "decimating" democracy.
'Angry and horrified'
Speaking from his Dewsbury constituency, he insisted he was "as straight as they come", and said he had asked the fees office for guidance before submitting claims and had stuck to the rules.
He said: "I have absolutely nothing to apologise for. I have done nothing wrong.
"I have not been at the periphery of the rules. I haven't abused the rules, I have been absolutely at the core of the rules."
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Traditionally, I don't think many people had much trust in politicians. Since the scandal of the expenses abuse, that trust has all but vanished.
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He said nearly every other MP in the country - including Tory leader David Cameron - had spent the same amount as him and the Tory-supporting Telegraph's reporting was politically motivated.
He pledged to donate £1,050 he claimed for a television to worthy local causes in his constituency.
But he added: "I am not doing it because I have done anything wrong... if I had done anything wrong I would be paying it back to the Parliamentary authorities."
He said the public "had a right to be angry and horrified" about what had emerged on expenses but he also rounded on the media, saying: "I think it's really important that we try to draw a line behind this... the thirst for blood from some elements of the media just seems like it's unstoppable."
The Telegraph also singles out former cabinet minster Clare Short, who it says was paid £8,000 too much after she claimed on her second home for her full mortgage payments rather than just the interest.
The Birmingham Ladywood MP, who quit Labour over the Iraq war and now sits as an independent, said it was "an honest mistake", she repaid the sum in 2006 and said the paper was trying to "smear" all MPs.
It comes as Labour slumped to its lowest ever opinion poll rating.
A YouGov poll of 1,814 people for The Sun newspaper suggests Labour support at a general election would be 22%, with the Conservatives on 41% and the Liberal Democrats on 19%. If repeated at a general election, the Conservatives would win with a Commons majority of 152.
Asked about voting intentions at next month's European elections the big gainers appear to be the UK Independence Party, with support at 15% - with the Lib Dems on 19%, Labour on 20% and the Conservatives on 29%. The Greens are on 6% and the BNP on 3%.
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In: Iraq, News
Tags: MP, Shahid, Malik, expences, labour, conservative, bnp, liberal, uk, britain, great, england, pakistan.
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