Denis MacShane announced he is resigning as an MP after a damning report from the Commons expenses watchdog found he wrongly claimed thousands of pounds.
The former Europe minister said he wanted to take "responsibility for my mistakes" after the Standards and Privileges Committee recommended he be suspended without pay and pension for a year - the longest suspension of an MP in living memory.
"I have been overwhelmed by messages of support for my work as an MP on a range of issues but I accept that my parliamentary career is over," he said. "I appreciate the committee's ruling that I made no personal gain and I regret my foolishness in the manner I chose to be reimbursed for work including working as the Prime Minister's personal envoy in Europe."
A senior Labour source said: "Denis has done the right thing."
The move came after the Labour Party declared the Rotherham MP's career to be "effectively over", and with Scotland Yard facing demands to reopen a criminal investigation.
The Standards and Privileges Committee detailed how Mr MacShane knowingly submitted 19 false invoices over a four-year period that were "plainly intended to deceive" Parliament's expenses authority. It said it was the "gravest case" it had dealt with.
The committee's sanctions follow an investigation by Parliamentary Standards Commissioner John Lyon, who accused Mr MacShane of "extremely serious" rule-breaking.
It also emerged in the report that the commissioner's findings had not been shared with the Metropolitan Police, which dropped its own lengthy inquiry into Mr MacShane without further action in July. Conservative MP Philip Davies urged police to revisit the allegations against Mr MacShane armed with the detailed evidence in the commissioner's "astonishing" report.
In a letter to the Met, he wrote: "Now that the report has been published, and parliamentary privilege no longer applies, I would ask you to consider reopening the investigation into Mr MacShane."
Committee officials suggested that the evidence from Mr MacShane would not be legally admissible - even though it has not now been made public.