David Cameron faced the prospect of more damaging headlines this weekend after Defence Secretary Liam Fox finally quit, forcing him to make his first significant Cabinet reshuffle.
Dr Fox departed on Friday night as fresh allegations emerged about his involvement in securing funding for self-styled "adviser" and lobbyist Adam Werritty.
In a letter to the Prime Minister, Dr Fox accepted that he had allowed the distinction between his personal interests and government activities to become "blurred".
For his part, Mr Cameron paid tribute to the "superb job" which Dr Fox had done. "I understand your reasons for deciding to resign as Defence Secretary, although I am very sorry to see you go," he said.
Despite the likelihood of another weekend of damaging newspaper headlines, it is understood that Mr Cameron had been prepared to let him carry on until an inquiry by the Cabinet Secretary was complete before reaching a decision. However, the Prime Minister moved swiftly to carry out the first major reordering of his top team since taking power 17 months ago.
Right-winger Philip Hammond has been installed at Defence, while Justine Greening enters the Cabinet to take his place at Transport.
Dr Fox's decision to step down came amid reports that Mr Werritty's jet-set lifestyle following him around the world was funded by a company bankrolled by wealthy Tory backers. The prominent venture capitalist Jon Moulton claimed he had been approached by the Defence Secretary following last year's general election to provide funds for Pargav, a not-for-profit company set up by Mr Werritty.
Cabinet Secretary Sir Gus O'Donnell is still expected to complete his probe into Dr Fox's links with Mr Werritty - who appeared to be effectively acting as an aide even though he had no official role at the MoD or with the Tory party.
Earlier this week, an interim report by MoD Permanent Secretary Ursula Brennan disclosed that Mr Werritty had met Dr Fox 22 times at the department and joined him on 18 overseas trips since he came to office last year.
Shadow defence secretary Jim Murphy said that Dr Fox's resignation had been "unavoidable and inevitable". "Governments must have rules and ministers must have standards. Liam Fox fell foul of the standards and he broke the rules. It was clear early on that he had breached the Ministerial Code," he said.
David Cameron faced the prospect of more damaging headlines this weekend after Defence Secretary Liam Fox finally quit, forcing him to make his first significant Cabinet reshuffle.
Dr Fox departed on Friday night as fresh allegations emerged about his involvement in securing funding for self-styled "adviser" and lobbyist Adam Werritty.
In a letter to the Prime Minister, Dr Fox accepted that he had allowed the distinction between his personal interests and government activities to become "blurred".
For his part, Mr Cameron paid tribute to the "superb job" which Dr Fox had done. "I understand your reasons for deciding to resign as Defence Secretary, although I am very sorry to see you go," he said.
Despite the likelihood of another weekend of damaging newspaper headlines, it is understood that Mr Cameron had been prepared to let him carry on until an inquiry by the Cabinet Secretary was complete before reaching a decision. However, the Prime Minister moved swiftly to carry out the first major reordering of his top team since taking power 17 months ago.
Right-winger Philip Hammond has been installed at Defence, while Justine Greening enters the Cabinet to take his place at Transport.
Dr Fox's decision to step down came amid reports that Mr Werritty's jet-set lifestyle following him around the world was funded by a company bankrolled by wealthy Tory backers. The prominent venture capitalist Jon Moulton claimed he had been approached by the Defence Secretary following last year's general election to provide funds for Pargav, a not-for-profit company set up by Mr Werritty.
Cabinet Secretary Sir Gus O'Donnell is still expected to complete his probe into Dr Fox's links with Mr Werritty - who appeared to be effectively acting as an aide even though he had no official role at the MoD or with the Tory party.
Earlier this week, an interim report by MoD Permanent Secretary Ursula Brennan disclosed that Mr Werritty had met Dr Fox 22 times at the department and joined him on 18 overseas trips since he came to office last year.
Shadow defence secretary Jim Murphy said that Dr Fox's resignation had been "unavoidable and inevitable". "Governments must have rules and ministers must have standards. Liam Fox fell foul of the standards and he broke the rules. It was clear early on that he had breached the Ministerial Code," he said.