Maria Miller has insisted it was her decision to resign as culture secretary amid claims she was forced out by No 10 after a row over her expenses.
She said the row had been an "enormous distraction" from "the incredible achievements of this government".
In the Commons, Labour leader Ed Miliband accused PM David Cameron of having "undermined trust in politics" with his handling of the row.
Conservative MP Sajid Javid has been named as the new culture secretary.
The MP for Bromsgrove has been promoted from his current role as Financial Secretary to the Treasury.
But Prime Minister David Cameron said he hoped Mrs Miller would return to the cabinet "in due course".
Mrs Miller was cleared of funding a home for her parents at taxpayers' expense, but was told to repay £5,800 of the expenses she claimed.
The independent parliamentary commissioner for standards had previously recommended she repay £45,000.
But the lower sum was approved by the Commons Standards Committee, which has the final say on whether to accept the commissioner's recommendations - a decision which sparked a backlash across the political spectrum and calls for changes in how complaints against MPs are investigated.
The committee also criticised her "attitude" during the investigation, which it ruled was a breach of the parliamentary code of conduct.
Mrs Miller apologised in the Commons, but was criticised for the brevity of the statement she made.
David Cameron's official spokesman said the PM and Mrs Miller discussed her future on Tuesday night and her resignation was confirmed on Wednesday morning.
In a TV interview, she dismissed speculation that she had been pushed into resigning by Downing Street, saying: "I take full responsibility for my decision to resign. I think it's the right thing to do."
She continued: "I was cleared of the central allegation made about me by a Labour MP.
"I hoped that I could stay, but it has become clear to me over the last few days that this has become an enormous distraction, and it's not right that I'm detracting from the incredible achievements of this government.
"I continue to support, obviously, my colleagues here in Parliament, the government, and above all the prime minister."
At Mr Cameron's weekly Commons question session, Mr Miliband said: "The reason the public was so appalled was that if it had happened in any other business, there would have been no question of them staying in their job."
He asked of the PM: "Why was he the last person in the country to realise her position was untenable?"
The Labour leader concluded: "His failure, even now, to recognise what went wrong has undermined trust not only in his government but in politics."
But Mr Cameron accused him of "playing politics" and "jumping on a bandwagon," asking why he had not called for Mrs Miller's resignation when she was still in her job.
The prime minister invited the opposition leader to join him and other party leaders and work out "what can we do to put beyond doubt that this is a good and honest Parliament, with hardworking people" in it.
Education Secretary Michael Gove said he was "saddened" by Mrs Miller's resignation.
He told BBC Radio 4's Today programme: "She has done some brave and right things, not least that equal marriage is now on the statute book."
Mr Gove, a former journalist, said he "would not criticise the press", but said: "Over the course of the a last couple of days the pressure on Maria Miller grew more intense.
"Some of the criticism directed at her had been very personal, and it must have been hurtful," he continued.
He also commended Mr Cameron's defence of Mrs Miller, arguing that his "loyalty, that desire to think the best of those who work with him, is a virtue".
"I don't think his judgement has been flawed," he said.
"The prime minister's attitude throughout has been governed by the basic human decency that is his hallmark."
Labour MP John Mann, whose complaint sparked the investigation into Mrs Miller's expenses, welcomed her resignation.
"My reaction is it's about time too... Maria Miller should have resigned immediately and when she didn't resign, David Cameron should have shown a bit of leadership and he should have sacked her," he told BBC Radio 4's Today programme.
"There is a difference between loyalty and blind loyalty," he continued later.
Voters were "incandescent" about Mrs Miller's expenses claims and Mr Cameron's "failure to act" had been "incomprehensible to most people", Mr Mann said.
"There's a word missing in British politics these days and that's honour, and I would define honour as: if you've done something wrong, as a cabinet minister, you resign - and if you don't resign you get sacked."
In her resignation letter to the prime minister, Mrs Miller said she was "immensely proud" of her work in cabinet, including "putting in place the legislation to enable all couples to have the opportunity to marry regardless of their sexuality".
She also acknowledged that her role in "implementing the recommendations made by Lord Justice Leveson on the future of media regulation, following the phone hacking scandals, would always be controversial for the press".
The prime minister said he was sorry to receive Mrs Miller's resignation but accepted her decision.
"I think it is important to be clear that the Committee on Standards cleared you of the unfounded allegations made against you, a point which has been lost in much of the comment in recent days," he wrote.