Energy and Resources Minister Chris Hartcher has resigned from the NSW government cabinet in response to a corruption inquiry.
Mr Hartcher said he had been forced to quit his portfolio as a result of an ICAC inquiry, but was confident he would clear his name.
"My resignation follows the issue of a search warrant by the Independent Commission Against Corruption against me," he said. "I am confident I will be cleared of any wrongdoing.
"This is the first contact I have had with the ICAC and given that their investigations have thus far had an unknown time frame, it is appropriate that I resign."
Mr Hartcher said he would continue to serve as the MP for Terrigal while he awaits the outcome of the ICAC's investigations.
"As this matter is before the ICAC, it is not appropriate to comment further," he said.
NSW Premier Barry O'Farrell, who is in India, said he had spoken to Mr Hartcher earlier on Wednesday.
“I accept and support Mr Hartcher's decision to resign from cabinet following today's actions by ICAC,” Mr O'Farrell said.
Fair Trading Minister Anthony Roberts will be appointed Acting Minister for Resources and Energy, Special Minister of State and Minister for the Central Coast, to replace Mr Hartcher.
Mr O'Farrell said that Stuart Ayres, the Member for Penrith, Parliamentary Secretary for Western Sydney, and a former government whip, would fill the vacant ministry position.
"Mr Ayres will be sworn in on Monday when portfolio arrangements would also be announced," he said.
In September, the Independent Commission Against Corruption raided the offices of central coast Liberal MPs Chris Spence and Darren Webber, seizing computers and documents.
The raids are believed to have been linked to allegations, revealed by Fairfax Media last year, that two staff members of Mr Hartcher funnelled political donations through a front company before the 2011 state election.
Last year Mr Hartcher told Parliament he was not under investigation in relation to the matter involving his two staff, but in September declined to repeat the statement.
In September, the NSW opposition called on Mr O'Farrell to suspend Mr Spence, the member for The Entrance, and Mr Webber, the member for Wyong, but Mr O'Farrell declined.
At that time, Mr O'Farrell said the Liberal Party had referred issues surrounding donations to the central coast Liberal campaign to the Electoral Funding Authority. But there had been no statements from ICAC that it was investigating the matter. He added that there was "no speculation at this stage of any ICAC activity in relation to the offices of Mr Hartcher".
Speaking from India on Wednesday, Mr O'Farrell said: "Chris said that, while the investigation is ongoing, and in the interests of the government, he feels it appropriate to resign from the ministry.
“I thank Mr Hartcher for his services to the government and the state, in particular for his success in bringing electricity prices under control for NSW households and businesses after years of double-digit price rises under Labor.”
A spokeswoman for the ICAC said she could not confirm or deny whether Mr Hartcher was under investigation. ''The commission cannot comment on operational matters,'' she said.
NSW Greens MP Dr John Kaye said: ''The O'Farrell government was elected on a promise of cleaning up NSW and now a senior minister has been caught in a web of alleged campaign donation irregularities."
NSW Greens mining spokesman Jeremy Buckingham said Mr Hartcher's resignation opened an opportunity to "restore balance" to the Resources and Energy ministry.
"He was a one-eyed supporter of coal and coal seam gas over renewable energy and the Greens welcome the announcement that he has resigned," Mr Buckingham said.
"Chris Hartcher is the third resources minister to be investigated by ICAC, after Eddie Obeid and Ian Macdonald.
"The Premier should take this opportunity to conduct a root and branch reform of the administration of mining in NSW, including the implementation of recommendations recently made by ICAC."