Rushanara Ali quits after reports of rent hikes for tenants
But she added: 'It is clear that continuing in my role will be a distraction from the ambitious work of the government.
'I have therefore decided to resign from my ministerial position.'
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It emerged that Ali had "evicted tenants" from her property in London, before re-listing the address after increasing the rent by "£700 a month".
In response, the Prime Minister thanked Ali for her 'diligent work' at the Ministry of Housing, Communities and Local Government, saying it would have 'a lasting impact'.
He said: 'I know you will continue to support the Government from the backbenches and represent the best interests of your constituents in Bethnal Green and Stepney.'
Ali's resignation follows reports in The i Paper that she had given four tenants at a property she owned in east London four months' notice to leave last November, and had then re-listed the property with a £700 rent increase within weeks.
Conservative Party chairman Kevin Hollinrake had called for her resignation earlier on Thursday, accusing her of 'staggering hypocrisy'.
The SNP also demanded that Starmer sack Ali "immediately" after the reports emerged.
Ali kicked out four tenants from her townhouse near the Olympic Park before re-advertising the same four-bedroom property at an increased price, from £3300 to £4000.
Tenant Laura Jackson, a self-employed restaurant owner and one of four people who rented the property, told the paper: 'It's an absolute joke. Trying to get that much money from renters is extortion'.
At the time of ending the tenants' contract, the firms which managed the property also attempted to charge Ali's tenants nearly £2000 for the house to be repainted and £395 for professional cleaning.
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Under the Tenant Fees Act 2019, landlords are prohibited from charging their tenants for professional cleaning, and are prohibited from charging tenants to repaint a home unless serious damage has occurred.
The MP for Bethnal Green and Stepney has previously been vocal on renters' rights and has spoken out against 'private renters being exploited".
Under Labour's Renters' Rights Bill, the UK Government plans to bring the private rented sector within the minimum standard set for social housing, and would ban landlords who end a tenancy to sell a property from re-listing it for six months.
SNP Westminster leader Pete Wishart said that Ali should have resigned "immediately" when the reports emerged.
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