NSW Energy Minister Chris Hartcher has quit his portfolio following the issue of a search warrant by the Independent Commission Against Corruption (ICAC).
Mr Hartcher issued a statement saying he was confident he would cleared of any wrongdoing.
He will continue to serve as Member for Terrigal while he awaits the outcome of ICAC's investigations.
"As this matter is before ICAC it is not appropriate to comment further," Mr Hartcher said.
He said that the raid was the first contact he had with ICAC.
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.
Premier Barry O’Farrell, speaking from India, said Mr Hartcher had his support.
“I accept and support Mr Hatcher’s decision.
“While the investigation is ongoing and in the interests of the government, he feels it appropriate to resign from the ministry.”
Mr O'Farrell thanked Mr Hartcher for his service, 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".
ICAC previously raided the offices of Mr Hartcher's Central Coast colleagues, Chris Spence and Darren Webber, in September, allegedly in relation to illegal donations which forced the suspension of Mr Hartcher's former staffer, Ray Carter.
It's alleged the two staffers funnelled political donations through a front company before the 2011 State election.
Fairfax revealed in 2012 that a $5000 donation under scrutiny was made out by a building firm owned by a local businessman, Matthew Lusted, to the benefit of the Liberal party's Central Coast candidates.
Opposition leader John Robertson said in September Mr Hartcher needed to "come clean", while Greens MP John Kaye called for Mr Hartcher to be stood down.
"The Premier and his Minister for Energy Chris Hartcher need to come clean on what they knew about these donations, when they knew and what action they took,'' Mr Robertson said.
Mr Hartcher has been a prominent advocate of the coal industry.
He recently pushed through controversial changes to the regulations for resources projects, known as Mining State Environment Planning Policy (Mining SEPP) amendments.
The new regulations in the Mining SEPP essentially shift the balance in favour of economics, reclassifying the economic value of a project's “primary consideration” above the environmental and social considerations.
The amendments came, controversially, in the wake of a decision in the Land and Environment Court, which upheld an appeal from a local community group to overturn approval of Rio Tinto’s Warkworth open cut coal mine.
Mr Hartcher ushered in the changes shortly after the ruling.
Rio has since reapplied to expand Warkworth under the new regulations.
Mr Hartcher also pushed the case for expansion of the coal seam gas (CSG) industry.
Last week he said a gas crisis would hit the State by 2018 if Santos' Narrabri and AGL's Gloucester coal seam gas projects do not start producing.
Citing a recent report from the Australian Energy Market Operator (AEMO), Mr Hartcher said the predicted shortfall would equate to half the average daily demand for gas in NSW, which would hit struggling manufacturers hardest.
Mr Hartcher's ministry also oversaw a ban on CSG activity within two kilometres of residential areas and also within Sydney water catchment areas.
However, the decision was criticised for its failure to protect regional NSW.
"Implementation of these exclusion zones is an admission that coal seam gas is unsafe, and this ban must be extended to include agricultural land, water catchments and sensitive environments," Greens mining spokesman Jeremy Buckingham said of the decision.
Environmental and landholder groups have today welcomed Mr Hartcher's resignation, saying it presented an opportunity to restore balance to decision making.
Lock the Gate national coordinator Phil Laird said the Mining SEPP amendments are one reason people won't miss Mr Hartcher.
"We hope the new Resources Minister is more even-handed and look forward to rebalancing the land use conflict in NSW," Mr Laird said.
Meanwhile Mr Buckingham said Mr Hartcher was a "one-eyed supporter of coal and coal seam gas over renewable energy" and the Greens welcomed the announcement he has resigned.
"Chris Hartcher is the third Resources Minister to be investigated by ICAC, after Eddie Obeid and Ian Macdonald," he said.
"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."
