Dean of Ripon John Methuen quit as he faced trial before an ecclesiastical court on 21 charges of conduct unbecoming a clerk in holy orders and one offence of serious, persistent or continuous neglect of duty.
His resignation came after eight hours of closed-doors discussions, after which the charges were withdrawn. Dean Methuen, 57, who was appointed to Ripon in October 1995, will go on sabbatical leave until he officially leaves Ripon Cathedral at the end of the year.
His decision to quit brings to a close five years of bitter wrangling at the cathedral, which has seen a series of resignations by officials in protest at his "autocratic" manner, and allegations of excessive drinking and inappropriate behaviour towards women.
He had been due to appear before the Consistory Court of the diocese of Ripon and Leeds, opening in Leeds on Monday. But after private discussions, a settlement was disclosed in court and formally agreed by Judge Rupert Bursell QC.
The dean's resignation was revealed in a carefully-worded statement read to the court by prosecuting counsel Geoffrey Tattersall.
As Dean Methuen sat impassively with his barrister Nigel Seed, Mr Tattersall told the judge that the proceedings related to "various allegations which are made against the dean".
Mr Tattersall said Dean Methuen – who has been suspended on pay of £28,000 since last September – had "decided to leave Ripon by the end of the year".
He had accepted Bishop of Ripon and Leeds John Packer's offer of a sabbatical, and the bishop had lifted the suspension on Dean Methuen working in the cathedral which was imposed last September.
Mr Seed told the court: "He is happy to consent to the matters being withdrawn rather than have the matters aired fully. That would serve no useful purpose."
Judge Bursell said: "I am satisfied it is in the interest of justice to withdraw the charges."
Mr Tattersall read the prepared statement in which Bishop Packer said he prayed that "good relations" would now be restored at Ripon Cathedral – the oldest in England.
The statement did not disclose whether any financial settlement had been agreed.
In the statement Dean Methuen said: "Following the unhappy disputes at the cathedral, I am pleased that the inhibition has been lifted. I believe that I now need a period of reflection on my future life and ministry, and I have accepted the bishop's offer of sabbatical leave.
"My wife and I have many friends in Ripon where there has been much creative work over the past 10 years and where we received a great deal of support during difficult times. I wish to give my best wishes and prayers for everyone in the cathedral and diocese."
Bishop Packer said in the statement: "I am grateful to John Methuen for the lively and vigorous ministry he had pursued at the cathedral over the last 10 years. My prayers are with him for his future life and ministry.
"The ministry and mission of the church have suffered during this unhappy period. I would ask all those concerned to refrain from recriminations and set the past behind them and hold in their prayers and dean, his wife and family and all those who have been damaged by these events."
One of the five officials who resigned at the cathedral after clashing with the dean was Robert Lambie, clerk of the chapter, the body that runs the ancient minster.
He said last night: "I am pleased to hear that the dean has resigned – if only for the sake of those of my ex-colleagues and friends who would have been required to give evidence.
"From my point of view the resignation has come six years too late and I would imagine others are feeling the same."