The Tory-Liberal Democrat coalition has suffered a major blow after David Laws was forced to resign over expenses abuse allegations.

The Treasury Chief Secretary became the new Government's first casualty after it emerged he had channelled tens of thousands of pounds in public money to his long-term partner.

According to newspaper reports, between 2004 and 2007, Mr Laws claimed between £700 and £950 a month to sub-let a room in a flat in Kennington, south London, owned by his partner James Lundie, who was also registered as living at the property.

Mr Laws issued an apology on Friday night and announced that he would "immediately" pay back tens of thousands of pounds claimed for rent and other housing costs between 2006 and 2009. He also referred himself to Parliamentary Standards Commissioner John Lyon.

But in a statement at the Treasury on Saturday, Mr Laws said: "I do not see how I can carry out my crucial work on the Budget and spending review while I have to deal with the private and public implications of recent revelations."

He said earlier that his motivation for making the claims was not "to maximise profit but to simply protect our privacy and my wish not to reveal my sexuality".

Responding to Mr Laws' resignation letter, Prime Minister David Cameron said he was an "honourable man", adding: "I hope that, in time, you will be able to serve again."