Treasury minister Tulip Siddiq has left the government, Number 10 said on Tuesday.
Siddiq said she had not breached the ministerial code but that continuing in her role would be a “distraction,” in a letter to Prime Minister Sir Keir Starmer.
She had referred herself to the prime minister’s ethics tsar.
Siddiq’s aunt is the former Bangladeshi Prime Minister Sheikh Hasina, who fled into exile after being deposed last year.
The former prime minister is facing an investigation by an anti-corruption commission in Bangladesh.
Siddiq has also come under intense scrutiny over her use of properties in London linked to her aunt’s allies.
She was reportedly given an apartment in King’s Cross in 2004 by Abdul Motalif, an associate of members of the Awami League party in Bangladesh.
It is also alleged that she lived in a flat in Hampstead which was given to her sister by lawyer Moin Ghani, who had represented the Hasina administration.
Hasina is alleged to have been involved in brokering a 2013 deal with Russia for a nuclear power plant in Bangladesh in which large sums of cash are said to have been embezzled.
Siddiq was photographed alongside her aunt and Russian President Vladimir Putin in 2013 but has denied allegations that she helped broker a deal with Moscow to get the project underway.
Chancellor to the Duchy of Lancaster Pat McFadden told Times Radio on Monday that the allegations against Siddiq would be properly examined.
“When we won the election six months ago, we boosted the powers of the independent adviser in the new ministerial code that was issued, to make sure that he had the power to initiate and carry out investigations into allegations like this.
“That is what he is doing, and that is the right way to deal with this.”
Independent adviser on ministerial standards Sir Laurie Magnus, a former banker appointed as the independent ethics tsar by former Prime Minister Rishi Sunak, has the power to recommend sanctions if an MP is found to be in breach of a code of conduct.
Siddiq pulled out of Chancellor Rachel Reeves’s trip to China last week in order to deal with the allegations against her as the pressure to resign mounted.
“In recent weeks I have been the subject of media reporting, much of it inaccurate, about my financial affairs and my family’s links to the former government of Bangladesh,” Siddiq said in her letter to Magnus last week.
“I am clear that I have done nothing wrong.”
Labour’s links to the former regime in Bangladesh have also come under scrutiny following the allegations against Siddiq. Starmer visited the country nine months after he was first elected as an MP, accompanied by Sir Stephen Timms, now a social security minister, and Steve Reed, now an environment minister.
Hasina congratulated Starmer following his general election victory in July last year, highlighting the “Awami League’s enduring friendship with the Labour Party.”
