Tory MP Johnny Mercer says he was "forced" to resign as a defence minister over the treatment of veterans who served in Northern Ireland.
No 10 confirmed his exit on Tuesday - ahead of the Overseas Operations Bill returning to the Commons on Wednesday.
The new law is designed to protect veterans from unfounded prosecutions.
But British soldiers who served in Northern Ireland will be excluded from the bill. Mr Mercer called that a "red line" for him staying in government.
In response, Boris Johnson said the government was "committed to doing more over the coming months, including for those who have served in Northern Ireland".
A No 10 spokesperson said Prime Minister Boris Johnson had "accepted" Mr Mercer's resignation and thanked him for his service as a minister.
But posting a resignation letter on Twitter immediately afterwards, Mr Mercer said he had been "relieved of my responsibilities in government".
The MP - who is a former Army captain - wrote that the government had "abandoned people in a way I simply cannot reconcile" in allowing "endless investigations" into historic killings to continue.
He added: "Veterans are being sectioned, drinking themselves to death and dying well before their time, simply because the UK government cannot find the moral strength or courage we asked of them in bringing peace to Northern Ireland in finding a political solution to stop these appalling injustices."
'No discernible efforts'
Plans were announced last year by the government to restrict the number of Troubles killings which could be fully investigated under a new approach where "new, compelling evidence" would be required.
But the Overseas Operations Bill would go further for other veterans, such as those who served in Iraq or Afghanistan, proposing a five-year limit on criminal prosecutions.
Six former soldiers who served in Northern Ireland during the Troubles are currently facing prosecution.
In 2019, the Public Prosecution Service in Northern Ireland said of 32 "legacy cases" it had ruled on since 2012, 17 related to republicans, eight to loyalists, and five were connected to the Army.
In his letter, Mr Mercer said "no discernible efforts have been made" to introduce similar legislation to cover Northern Ireland veterans, despite previous pledges, adding: "I can see no prospect of this changing."
The Tory MP said he was "deeply proud of my predecessors who served in Northern Ireland", adding they were "not second-class veterans" and deserved "the protection of the Overseas Operations Bill like everyone else".
No 10 later shared a letter from the PM to Mr Mercer, thanking him for "highlighting the importance of legislating to protect our Armed Forces against vexatious and repeated claims".
Mr Johnson wrote: "The conclusion of the enactment of the Overseas Operations Bill is a crucial part of that, addressing veterans who have served overseas.
"But we are committed to doing more over the coming months, including for those who have served in Northern Ireland."
While the government has not moved on Mr Mercer's calls, it has changed course over another contentious part of the bill, ahead of the debate on Wednesday.
The law had come under fierce criticism by human rights groups, former military commanders and lawyers for including a "presumption against prosecution" after the five-year time frame for the most serious of crimes - namely torture, genocide and crimes against humanity.
Labour's Lord Roberts brought an amendment to the bill in the House of Lords to ensure the rule does not apply for those actions, which won the support of peers.
And now, ahead of the debate, the Ministry of Justice has conceded to the amendment, promising to exclude torture, genocide and crimes against humanity from the rule.
A spokeswoman for the Ministry of Defence said: "Whilst we maintain nothing in this bill prevents those accused of breaking the law from being prosecuted, we have listened to concerns, and in order to send a powerful message to the international community, amendments will be made to the Overseas Operations Bill."
However, the department confirmed it would seek to overturn three other amendments agreed by peers earlier this month.