Beleaguered Stephen Byers was last night in the political wilderness after he finally succumbed to months of mounting pressure and resigned as Transport Secretary.

He admitted that his plight had been damaging the Government but defiantly declared: "I am not a liar."

At a surprise Downing Street Press briefing, the North Tyneside MP accepted that his position had been fatally undermined by the civil war which engulfed his department's communications team, and the subsequent claims that he had misled the House of Commons and the public.

A typically composed Mr Byers - an archetypal New Labour figure and close ally of the Prime Minister - predicted that "the political obituaries will be full of talk of spin doctors, e-mails and who said what to whom".

While acknowledging there had been misjudgements, Mr Byers defended his personal integrity.

He said: "Government ministers take many decisions and I know that I have made mistakes, but I have tried at all times to behave honourably and with the interests of the British people at heart.

"And the people that know me best know that I am not a liar."

But Mr Byers acknowledged that the negative publicity that has swirled around him in recent months was hurting the New Labour cause.

"By remaining in office I damage the Government," he said. "Having worked for the Labour Party all my adult life, it is not easy to admit to that reality, but I cannot and will not allow this to continue."

Tony Blair said he understood the decision, but argued that much of the "huge" volume of criticism directed at his Transport Secretary had been unfair.

The Prime Minister, who will announce a limited reshuffle of his ministerial team today, said: "As I have said many times in the past few months, when it comes to important policy questions, Steve has taken the right decisions for the future."

Conservative leader Iain Duncan Smith said: "I'm pleased that Stephen Byers has finally gone.

"My concerns are that in going he seems to think that he has nothing to answer for whatsoever.

"And secondly, and I think most importantly, I think the Prime Minister genuinely should have got rid of him earlier."

But last night, there was considerable sympathy for Mr Byers in the North-East. Eddie Darke, constituency secretary for North Tyneside Labour Party and long time agent, said: "I'm sad he felt he needed to resign, but he is an excellent local MP and will continue to work hard for the people of North Tyneside."

Chris Lennie, deputy general secretary of the Labour Party and Northern Region Director, said: "I am saddened that Stephen decided to resign, but totally understand his decision after the hounding he has been through."

Fraser Kemp, MP for Houghton and East Washington, said: "I think he has obviously come to the conclusion that the focus on him had started to damage the Government."

Redcar MP Vera Baird said: "I think he has been very badly treated by the media."

Derek Foster, MP for Bishop Auckland, said: "I deeply regret Stephen's resignation because he was doing an excellent job for the North-East. He will be sadly missed by all his North-East colleagues."

Westminster sources suggested that rather than any one particular incident pushing Mr Byers into his decision, he was persuaded to go by the "accumulative" effect of events.

Mr Byers' departure has opened up one of the highest-profile and thankless positions around the Cabinet table.

Speculation was rife at Westminster as to who will be offered the responsibility for revamping Britain's crumbling transport infrastructure.

Among those in the frame was Charles Clarke, who was given an important role as Labour Party chairman but would almost certainly jump at the chance of having an official portfolio to take to Cabinet meetings.

Other possible candidates included Defence Secretary Geoff Hoon and Patricia Hewitt, whose move from the Department of Trade and Industry would mirror Mr Byers's last promotion.

Despite the inevitable speculation, there seemed very little prospect that Mr Byers' resignation would open the door for another return to office for former Northern Ireland Secretary and New Labour architect and Hartlepool MP Peter Mandelson