In a letter to the prime minister James Purnell said: "I owe it to our party to say what I believe no matter how hard that may be. I now believe your continued leadership makes a Conservative victory more, not less likely.
"That would be disastrous for our country. This moment calls for stronger regulation, an active state, better public services, an open democracy."
The letter continued: "I am therefore calling on you to stand aside to give our party a fighting chance of winning. As such I am resigning from Government. The party was here long before us, and we want it to be here long after we have gone. We must do the right thing by it."
Last month The Daily Telegraph claimed Purnell had avoided paying capital gains tax on the sale of his London flat after claiming on expenses the tax advice he received from an accountant.
A statement on the former minister's website this morning reads: "The last few weeks have been deeply uncomfortable for anyone who believes that politics shouldn't be about getting rich but about making people's lives better. All politicians are under scrutiny and we have to answer to our constituents. What the expenses crisis has underlined is that change in our political system is long overdue.
"Politics needs to become more open - open to scrutiny, open to a wider range of candidates, open to voters so they can better hold politicians to account. ??I know how angry people are about MPs expenses. However, it is important that people know that what the Telegraph has written about me is totally wrong."
Work and Pensions secretary resigns from Cabinet and advises prime minister to give up the leadership
The secretary of state for work and pensions, James Purnell has resigned from his position in the Cabinet - and advised Gordon Brown to do the same.
