Sarah Teather is to step down as an MP at the next election, citing "some aspects of government policy".
The Lib Dem was first elected in 2003 in Brent East, north-west London, at the age of 29 - making her the youngest MP in Britain - and later elected to the new seat of Brent Central.
She served as children's minister in the coalition government before returning to the backbenches last year.
A Lib Dem spokesman said the party was "disappointed" by her decision.
It comes a week before the annual party conference.
Ms Teather told the Observer she was stepping down because "she no longer feels that Nick Clegg's party fights sufficiently for social justice and liberal values on immigration".
It quoted her as saying that Mr Clegg's tougher approach to immigration - including a plan for some immigrants to pay a £1,000 deposit when applying for visas - left her feeling "desolate" and "catastrophically depressed".
"It was an absolutely black moment. I couldn't even move from my seat when I read it. I was so depressed I couldn't even be angry. I was utterly desolate," she is quoted as saying.
She also pointed to her party's decision to back the Tories' planned cap on welfare, while she was in government.
"It was the moment of realising that my own party was just as afraid of public opinion as the Labour Party. Something did break for me that was never, ever repaired," she said.
In the statement on her website, she said: "For various reasons, to do with some aspects of government policy and the very particular issues that brought me to politics in the first place, I now feel that come the next general election, it will be the right time for me to step aside."
She went on: "As with most party members, there have always been a few issues where I have disagreed with party policy.
"But over the last three years, what has been difficult is that policy has moved in some of the issues that ground my own personal sense of political vocation - that of working with and serving the most vulnerable members of society.
"I have disagreed with both government and official party lines on a whole range of welfare and immigration policies, and those differences have been getting larger rather than smaller."
'Left me tired'
She said she had tried to balance fighting for what she believed in with the "loyalty and friendship" she felt towards colleagues - but that had created "intense pressure, and at times left me very tired".
"I don't think it is sustainable for me personally to continue to try and do that in the long term," she said.
Most recently Ms Teather voted against the government's motion on potential military action in Syria in response to the suspected use of chemical weapons.
The MP, who is chair of the all-party parliamentary group on refugees, also criticised the government's immigration poster campaign which told illegal immigrants to "go home or face arrest".
In 2003 she overturned a Labour majority of more than 13,000 to be elected in Brent East and increased her majority at the 2005 general election.
Following boundary changes she won the Brent Central seat in 2010, by a slim margin of 1,345.
Ms Teather was appointed minister for children and families in the coalition government, but she lost her place in September last year to make room for the return of David Laws, who resigned over his expenses in 2010.
A Liberal Democrat spokesman said: "Of course we are disappointed by Sarah's decision.
"The Liberal Democrats have a proud record in government, including cutting taxes for working people by £700 and lifting the poorest paid out of tax altogether, helping businesses create a million jobs; investing billions more in schools to help the poorest children and introducing radical plans for shared parental leave.
"Sarah was a part of this when she served as a minister in the coalition, as well as playing a key role in ending Labour's disgraceful policy of locking up children for immigration purposes."