ANDY Coulson quit as Downing Street communications chief today, saying the continuing row over phone-hacking when he was editor of the News of the World was distracting from his job.
In a personal statement issued by Number 10, Mr Coulson said he was "proud" of his work with David Cameron and the coalition.
But he added: "Nothing is more important than the Government's task of getting this country back on its feet.
"Unfortunately continued coverage of events connected to my old job at the News of the World has made it difficult for me to give the 110% needed in this role.
"I stand by what I've said about those events but when the spokesman needs a spokesman it's time to move on.
"I'll leave within the next few weeks and will do so wishing the Prime Minister, his family and his brilliant and dedicated team the very best for what I'm sure will be a long and successful future in Government."
Mr Cameron said in a statement: "I am very sorry that Andy Coulson has decided to resign as my director of communications, although I understand that the continuing pressures on him and his family mean that he feels compelled to do so.
"Andy has told me that the focus on him was impeding his ability to do his job and was starting to prove a distraction for the Government.
"During his time working for me, Andy has carried out his role with complete professionalism. He has been a brilliant member of my team and has thrown himself at the job with skill and dedication. He can be extremely proud of the role he has played, including for the last eight months in Government.
"I wish Andy all the very best for his future, which I am certain will be a successful one."
An hour before Mr Coulson's announcement, during a visit to RAF Brize Norton in Mr Cameron's Oxfordshire constituency, the Prime Minister was asked if he still had faith in him.
He said: "You know what I have said about this in the past. I have got nothing to add to that and I think he's done a very good job for the Government."
Last week Mr Cameron refused to confirm or deny reports that Mr Coulson had offered to resign to spare the Government further damage.
But he admitted that his communications director was "extremely embarrassed" about the drip-drip of accusations that he knew famous people's phone voicemails were being accessed.
The timing of today's announcement will spark claims that the Government is "burying bad news", coming as former prime minister Tony Blair was giving evidence to the Iraq Inquiry and with the spotlight still on shadow chancellor Alan Johnson's resignation.
In the Commons, former minister Denis MacShane demanded that the Prime Minister come to the chamber to make a statement on Mr Coulson's resignation.
In a point of order, he said: "We're being informed by television that Mr Andy Coulson - one of the most important figures in Her Majesty's Government and one of the closest aides to the Prime Minister - is now resigning.
"As the House is sitting, I believe it would be appropriate for the Prime Minister to come to the Commons to explain why this is happening and give the public the full details here in the House of Commons, rather than bury this news on a day when, frankly, there's an awful lot of other news taking place."
Deputy Speaker Lindsay Hoyle said it was "nothing to do with this House" if a member of the Prime Minister's staff had resigned.
This is the full statement issued by Downing Street's director of communications Andy Coulson today:
"I can today confirm that I've resigned as Downing Street director of communications.
"It's been a privilege and an honour to work for David Cameron for three-and-a-half years.
"I'm extremely proud of the part I've played in helping him reach No 10 and during the coalition's first nine months.
"Nothing is more important than the Government's task of getting this country back on its feet.
"Unfortunately, continued coverage of events connected to my old job at the News of the World has made it difficult for me to give the 110% needed in this role.
"I stand by what I've said about those events but when the spokesman needs a spokesman, it's time to move on.
"I'll leave within the next few weeks and will do so wishing the Prime Minister, his family, and his brilliant and dedicated team the very best for what I'm sure will be a long and successful future in Government."