Mr Fitzgibbon returned to Parliament as a backbencher after tendering his resignation to Prime Minister Kevin Rudd at 1.30am, following revelations involving his brother, NIB chief Mark Fitzgibbon, American health group Hamana and defence officials.

In his resignation letter, Mr Fitzgibbon said he thoroughly examined the nature of any contact between Humana, Mark Fitzgibbon and his office.

He learned that one meeting between the parties was held in his ministerial office, and that members of his staff were present at a number

of meetings.

“Again, despite my decision to avoid being a part of any discussions between the parties, I am not absolutely satisfied that that objective was achieved to the extent necessary to ensure full compliance with your Ministerial Code of Conduct,” Mr Fitzgibbon wrote.

“On that basis, and to protect the integrity of the Government, I have decided to resign as a member of the executive, effective, immediately.”

He did not respond to the Mercury’s question whether his resignation would impact on his standing for Hunter at the next election.

Mr Baldwin said Mr Fitzgibbon’s fall was “much delayed” and predicted it was the “beginning of the end” for a Labor Government that could not maintain its own code of conduct.

“This was not one strike, two strike, three strikes you’re out – it took a fourth,” he said on Thursday.

“The Prime Minister should have shown leadership and acted earlier.”

Mr Baldwin said Mr Fitzgibbon had shown incompetence as defence minister starting with the SAS pay scandal, through to his failure to disclose political gifts.

But although Mr Fitzgibbon accepted responsibility for those omissions, Mr Baldwin predicted it would bring down the Government.

“The fish is smelling rotten from the head down,” he said.