Welfare minister Iain Duncan Smith resigned over planned reductions in welfare payments for people with disabilities in a blow for Prime Minister David Cameron.
Duncan Smith, one of six senior ministers who broke ranks to back Brexit in the upcoming EU membership referendum, blamed Chancellor of the Exchequer George Osborne in a scathing letter.
"Changes to benefits to the disabled and the context in which they've been made are a compromise too far," he wrote in a letter, following uproar against the plans announced by Osborne in parliament this week.
"They are not defensible in the way they were placed within a budget that benefits higher-earning taxpayers," said Duncan Smith, who had been in his post since 2010 and led the Conservative Party between 2001 and 2003.
He said the government's aim of cutting the deficit by 2020 was "more and more perceived as distinctly political rather than in the national economic interest."
Cameron said he was "puzzled and disappointed" by Duncan Smith's decision to resign.
"I regret that you have chosen to step down from the government at this time," Cameron said, in a letter to the former minister made public by Downing Street, adding that the government had agreed to review the controversial welfare reform.
Duncan Smith's resignation highlights growing divisions within Cameron's Conservative Party in the run-up to the June 23 referendum.
Cameron is leading the campaign for Britain to stay in the European Union but around a third of the party's MPs want out.
The Financial Times said the resignation was "a huge blow" for Cameron that would inflict "serious damage" on Osborne.
The Daily Telegraph said the move "threatened to throw the government into disarray".
Several Conservative MPs, along with the main opposition Labour Party, had criticised the disability benefits cuts announced by Osborne.
Osborne said the plan would cut around £1.3 billion a year off the bill for so-called Personal Independence Payments (PIP), a weekly allowance covering extra costs for people with long-term ill health or disabilities.
A government source earlier on Friday said they would be "kicked into the long grass".
"We need to take time and get reforms right and that will mean looking again at these proposals," the source said.
On the sidelines of an EU summit in Brussels, Prime Minister David Cameron said: "We are going to discuss what we've put forward with the disability charities and others."
Labour leader Jeremy Corbyn said the plan was "appalling", claiming that 200,000 of the 640,000 people affected by the proposed changes would lose out altogether as a result. afp