Immigration minister Mark Harper has resigned from the government after it emerged his cleaner did not have permission to work in the UK.
Mr Harper notified Prime Minister David Cameron, who accepted his resignation "with regret", Number 10 said.
It added there was "no suggestion" the 43-year-old Conservative MP for the Forest of Dean had "knowingly employed an illegal immigrant".
Fellow Tory James Brokenshire has been appointed the new immigration minister.
In his letter to the PM, Mr Harper said he would continue in his role as MP.
He explained he had made checks when he first employed the cleaner at his London flat in April 2007, taking a copy of her passport and a Home Office letter which stated she had the right to work in the UK.
Mr Harper said he considered the issue again when appointed a minister in the Cabinet Office in May 2010 and immigration minister in September 2012 but concluded "no further check was necessary".
A year later, he said, he talked a lot about employers and landlords carrying out "reasonable checks" on workers.
Given this focus, he said, he thought it "prudent to check that all my documents were in order for my cleaner".
Last month, after being unable to locate the documents, he asked his cleaner for further copies but when his private office checked the details with immigration officials, it was found she did not have indefinite leave to stay in the UK.
He was told this on Thursday and said in his letter that he immediately told Home Secretary Theresa May.
The matter was now with immigration enforcement, he added.
"Although I complied with the law at all times, I consider that as immigration minister, who is taking legislation through Parliament which will toughen up our immigration laws, I should hold myself to a higher standard than expected of others," he said.
In his reply, Mr Cameron said Mr Harper had "taken an honourable decision" and he hoped to see him return to the frontbench "before too long".
"I understand your view that, although you carried out checks on your cleaner, you feel that you should hold yourself to an especially high standard as immigration minister," Mr Cameron wrote.
The home secretary said: "Mark has been an excellent minister and he can be proud of the role he has played in sharply reducing immigration to Britain."
The Home Affairs Committee chairman, Labour MP Keith Vaz, said Mr Harper left an "impressive legacy".
"The immigration portfolio is one of the toughest in government but he carried out his role with effectiveness and good humour," he added.
Shami Chakrabarti, director of civil liberties campaign group Liberty, said it was the "nasty immigration politics", not the politician, that should go.
"The vile Immigration Bill would turn landlords and vicars into border police, checking people's status before offering them shelter or marriage services," she said.
Referring to legislation that would impose charges on migrants needing NHS accident and emergency treatment, the National Health Action Party said: "If the immigration minister cannot check his own cleaner is here legally, how does he expect hard-pressed NHS staff to check patients?"
BBC home affairs correspondent Danny Shaw tweeted: "Mark Harper will probably be best remembered for the 'go home' ad vans & measures to clamp down on benefit claims from EU immigrants."
The vans referred to by our correspondent were launched under Mr Harper's time as a minister and driven around parts of London carrying a message for illegal immigrants to "Go home or face arrest".
The Home Office initiative resulted in few calls to the helpline number provided.
At the start of this year, when work restrictions for Bulgarians and Romanians were lifted, Mr Harper insisted the benefits system had been "tightened up" so people coming to the UK did so to work, not claim benefits.
Mr Harper was appointed immigration minster in September 2012. He has also held the post of minister for political and constitutional reform and shadow minister roles for defence and disabled people.
Before becoming an MP in 2005, Oxford University-graduate Mr Harper established his own chartered accountancy business in the Forest of Dean, in Gloucestershire.
Labour peer Baroness Scotland, the then-Attorney General, had similar difficulties with her housekeeper's immigration status in 2009, but did not resign over the matter.
She was fined £5,000 for illegally employing an illegal immigrant, but a year later a jury found her housekeeper had duped the baroness into hiring her.
Junior Home Office minister James Brokenshire, MP for Old Bexley and Sidcup, has been promoted to the immigration brief.
Mr Brokenshire said in a tweet: "Honoured to have been asked to take on the role of immigration minister and to continue reducing net migration to sustainable levels."
In a minor reshuffle, Conservative MP Karen Bradley will take up Mr Brokenshire's former post; fellow Tory John Penrose will become a government whip in the House of Commons; and Harriet Baldwin, also a Tory MP, becomes assistant whip in the Commons.