Homelessness minister quits over rent hike claims
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.'
The Prime Minister thanked Ms 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 back benches and represent the best interests of your constituents in Bethnal Green and Stepney.'
Ms 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 then relisted 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'.
Responding to Ms Ali's resignation, shadow housing secretary Sir James Cleverly said: 'I said that her actions were total hypocrisy and that she should go if the accusations were shown to be true.
'Labour's position is always, 'Do as I say, not do as I do'. They can't get away with that when in government.'
A Liberal Democrat spokesperson said: 'Rushanara Ali fundamentally misunderstood her role. Her job was to tackle homelessness, not to increase it.
'At a time of widespread political disillusionment, her actions were staggeringly irresponsible and only added insult to injury after years of delay for renters' rights reform under the Conservatives.
'The Prime Minister must appoint a new homelessness minister swiftly who will take the need to end homelessness once and for all seriously.'
The reports also drew strong criticism from renters' rights campaigners, given the Government's pledge to clamp down on what it sees as unfair rental practices.
Ben Twomey, chief executive of Generation Rent, described the allegations as 'shocking and a wake-up call to Government on the need to push ahead as quickly as possible to improve protections for renters'.
He added: 'It is bad enough when any landlord turfs out their tenant to hike up the rent, or tries their luck with unfair claims on the deposit, but the minister responsible for homelessness knows only too well about the harm caused by this behaviour.'
Tom Darling, director at the Renters' Reform Coalition, said: 'It's mind-boggling that we have a homelessness minister who has just evicted four people in order to rake in more rent – something that will soon be illegal under the Renters' Rights Bill her own department is bringing through Parliament.'
Under the Bill, landlords who evict tenants in order to sell their property would be banned from relisting it for rent for six months.
Ms Ali's house, rented on a fixed-term contract, was put up for sale while the tenants were living there, and it was only relisted as a rental because it had not sold, according to The i Paper.
Her former tenant Laura Jackson told the paper she was one of four tenants who received an email giving four months notice to leave the property for which they collectively paid £3,300 in rent.
Ms Jackson, a self-employed restaurant owner, said she saw the house relisted weeks after she and her fellow tenants had left, but with a rent of around £4,000.
The 33-year-old told The i Paper: 'It's an absolute joke. Trying to get that much money from renters is extortion.'
She also said two letting companies managing the property for Ms Ali had attempted to charge £395 in cleaning fees and £2,000 to repaint the house when they left.
The tenants successfully challenged this as landlords are prohibited from charging tenants for professional cleaning and repainting costs unless serious damage has occurred.
A Labour voter, Ms Jackson suggested it was a 'conflict of interest' for MPs to be landlords, especially in their own constituencies.
Ms Jackson declined to comment further when approached by the PA news agency but confirmed the details of The i Paper's story.
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