5.45pm - By SCOTT MacLEOD
UPDATE - Immigration Minister Lianne Dalziel resigned from all of her Government portfolios tonight amid claims she lied about a letter which came into the possession of TV3.
At a 5.15pm press conference in Auckland, Prime Minister Helen Clark said she had received the resignation of Lianne Dalziel and "I have advised the Governor General to accept it".
Helen Clark said her attention was drawn to an NZPA report that suggested that Ms Dalziel had been specifically asked how TV3 had obtained the lawyer's notes.
Ms Dalziel had denied an allegation about passing on the letter.
The prime minister said that after seeing the NZPA report she discussed the matter further with Ms Dalziel.
"She has advised me that she does not clearly recall the conversation with the NZPA reporter."
But Helen Clark said that, nevertheless, Ms Dalziel had come to the conclusion that she would face ongoing speculation which can only be damaging to the Government. On that basis, Lianne Dalziel had offered her resignation.
Acting ministers had taken over Lianne Dalziel's portfolios.
The prime minister said she appointed Paul Swain to the commerce portfolio, Rick Barker to immigration and Margaret Wilson as the minister responsible for the Law Commission.
Helen Clark said "I have accepted the resignation with great sadness because I know just how much Lianne Dalziel has poured into her job these past four years and two months."
Helen Clark said she had also asked State Services Commissioner Michael Wintringham to find out whether any officials were involved in circulating the letter.
The investigation was also to find out how the letter came into Helen Clark's electoral office.
Lianne Dalziel had given interviews on Wednesday and Thursday admitting she had given misleading answers to Morning Report in an earlier interview on Wednesday.
Helen Clark said she saw Ms Dalziel on Thursday morning amid her busy schedule dealing with flood damage and other commitments.
"I asked her then what she thought should happen. She said that she did not think that she should resign, but she would if she had lost my confidence. Yesterday that was a fine line to call."
Helen Clark said after looking at the NZPA report and the original question in Parliament: "I advised Lianne Dalziel that in my view a clear line had been crossed between a statement which was misleading and a statement which was untrue."
Helen Clark said that Ms Dalziel had then tendered her resignation which was accepted and which was effective from tonight.
"As I said, it is a heavy personal blow to a minister who has been hardworking, conscientious and devoted to her job."
Helen Clark this afternoon phoned NZPA editor John Crowley to ask whether he could confirm that in the interview Ms Dalziel had used the word "no" in response to the question.
In discussions with Crowley, the prime minister said she accepted the veracity of the NZPA report, and his assurance that the story the agency had published was accurate.
In the interview with NZPA's Mary Longmore, Ms Dalziel was asked:
Question: "Had you seen those notes, that letter, before today? TV3 had it, didn't they?".
Answer: "Yeah. No, I hadn't seen it before today."
Question: "Do you know how they got it?"
Answer: "No. They didn't discuss it with me."
That exchange is in contrast with what Mz Dalziel has since revealed this week.
She has admitted that with her knowledge one of her staff delivered the lawyer's letter to TV3, with her authority.
She has also admitted that she herself provided the letter to the Dominion Post newspaper.
Ms Dalziel triggered her own downfall when she became enraged by the way lawyers were handling the case of the Sri Lankan girl.
She used the letter, which carried handwritten notes by lawyer Carole Curtis, to claim there had been an attempt to manipulate media coverage.
Opposition MPs said she should never have released it because it was privileged, questioned how she had obtained it, and demanded her resignation.
Ms Dalziel said it had been faxed to Ms Clark's electorate office in Auckland, which had sent it to her in Parliament.
She said it was one of several documents the lawyer had faxed to the electorate office.
Ms Curtis swore an affidavit saying she did not fax the letter, and could not have done so because she did not have it.
She said she drew a guinea pig on it for the Sri Lankan girl, and gave it to her.
Ms Dalziel yesterday offered to resign if the prime minister had lost confidence in her.
She had previously apologised for misleading the public, but maintained she had been "technically correct" when she had answered question about the letter.
Lianne Dalziel has made contradictory comments on the letter given to TV3, and how it became public.
* Monday night, to NZPA, when asked if she knew how TV3 got the letter: "No, they didn't discuss that with me."
* Wednesday morning: National Radio's Morning Report: "So you hadn't put it in the public arena even though you had a copy of it?" Dalziel: "No."
* Wednesday afternoon, in Parliament: "I did not personally give the document to TV3 but I can confirm that a staff member of mine did."
* Thursday morning, on Morning Report: "I did arrange for my press secretary to give it to TV3. I myself gave a copy of it to the Dominion Post later in the evening after the TV3 programme had screened."
(This is the letter which Immigration Minister Lianne Dalziel has been accused of leaking)