Prime Minister Helen Clark has announced she has accepted the resignation of the Immigration Minister Lianne Dalziel from all her portfolios.
Dalziel has been under fire over the leaking of a document relating to a Sri Lankan teenager who was deported last week after unsuccessfully claiming refugee state becuase of sexual abuse by her relatives in Sri Lanka.
Dalziel offered to resign on Thursday over the leaking of the document to the media, but Clark says that offer was not taken up until she obtained new information about the minister's comments.
She says Dalziel crossed the line in a statement she made over the leak of a letter between the deported girl and her lawyer.
"A clear line had been crossed between a statement that was misleading and a statement that was untrue," Clark says.
Dalziel admitted earlier this week to misleading the public and leaking a private letter between the girl and her lawyer to the media.
Dalziel said in leaking the letter she wanted to show that the girl's lawyer was trying to use the media to plead her client's case.
The resignation comes only a day after Dalziel's job appeared safe.
Senior government figures backed her over the matter on Thursday, with deputy prime minister Michael Cullen expressing support on behalf of Prime Minister Helen Clark.
Cullen told the House on Thursday that Clark still had confidence in the minister but the issue had not been handled according to Dalziel's usual high standard.
The row is over the letter which turned down the girl's appeal to stay in New Zealand. Lawyer Carole Curtis says she took the letter to the refugee centre in June last year to show the girl. She became distraught so Curtis wrote out a defence strategy and drew a picture of a guinea pig on the letter to help calm her down.
The question is how the letter found its way into Dalziel's hands. It is claimed the letter was faxed to Clark's electorate office in Auckland. From there the letter was sent to Dalziel in Parliament. Dalziel said a staff member gave the letter to TV3 and she gave a copy to the Dominion Post newspaper.
Dalziel maintains that the lawyer's office made the information available to Clark's electorate office in an attempt to gain support for the case against deporting the girl.
But Curtis denies this and said: "The idea that as a lawyer I would send a letter with a guinea pig on it, is just ludicrous."
Clark maintained on Thursday that the staff in the electorate office are adamant that the letter was received from the lawyer's office.
Curtis says the last time she saw the letter it was in the girl's room the day she was deported. "I cannot say who took the letter, but I know after the girl and her grandmother were taken, the contents of the room were taken into care of the Immigration Service."
National MP Judith Collins has laid complaints with the Solicitor General, Privacy Commissioner and the Wellington Law Society over the issue. She says Dalziel's behaviour was particularly bad because the minister is a former lawyer.