Louise Haigh resigned as Britain's transport secretary on Friday after revelations that she pleaded guilty to a criminal offence before becoming a member of parliament.
Her resignation is the first by a member of Prime Minister Keir Starmer's cabinet since his Labour party won power at a general election in July.
She handed in her notice after media reports emerged on Thursday evening that she had incorrectly told police her work mobile phone was stolen when she was mugged in 2013.
But she found the handset later and did not inform police. British media said she admitted a fraud charge in court in 2014 and was discharged without any further action.
In a resignation letter, published by Downing Street, Haigh, 37, said she wanted to avoid being a "distraction" to the government.
"I remain totally committed to our political project, but I now believe it will be best served by my supporting you from outside government," she wrote.
Starmer thanked Haigh for her work and said she had made "huge strides" to get the country's railways back into public ownership.
Starmer lost his chief of staff Sue Gray in October, following months of intense media scrutiny over her role.
Haigh oversaw the progress of the new high-speed HS2 train, which has been mired in controversy since the previous Conservative government axed key legs of the railway due to spiralling costs.
She was also charged with delivering on the government's pledge to renationalise the ailing rail services, with the plans getting the green light from parliament last week.
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