Judith Collins has confirmed she is resigning as a Minister from Cabinet, with the emergence of an email that suggests that she was undermining the then-head of the Serious Fraud Office while she was Police Minister.
In a press conference this afternoon, Ms Collins said she'd been "the subject of a two-year smear campaign".
She said she was today shown contents of an email between blogger Cameron Slater and others, where it was inferred Collins was trying to remove Serious Fraud Office boss Adam Feeley.
An indignant Collins said she rejected any suggestion she was gunning for Mr Feeley.
Collins said she asked the Prime Minister to convene an inquiry. She promised to co-operate with the inquiry.
Collins said her decision to quit would allow Prime Minister John Key to focus on the election campaign.
"This has been an extremely distressing and disappointing time."
She said it was her decision to quit.
Read more of today's coverage from the Herald:
• Collins resignation: Latest updates
• Opposition parties united: Judith Collins had to go
• The email that brought down
• Full statement from Judith Collins
• Judith Collins' career in pictures
Collins added that Mr Feeley was an excellent chief executive and the State Services Commissioner had investigated and could "see nothing untoward."
She left without taking any questions.
In a statement released at midday today, Ms Collins strongly denied any suggestion of inappropriate behaviour.
"I am restrained in clearing my name while I am still a Minister inside Cabinet and I believe the right thing to do is to resign as a Minister so I am able to clear my name.
"The election should be focused on the issues that matter such as law and order, health, education and the economy and I do not want this matter to be a distraction for the Prime Minister or the National Party during the campaign, she said.
"I am a strong advocate for the people of Papakura and I will continue to put the same passion and energy into representing them.
"I am getting on with my job as MP for Papakura and will campaign strongly for re-election this year.
Mr Key said the emails raised questions about Ms Collins' judgement.
"This new information suggests Ms Collins may have been engaged in discussions with a blogger in 2011 aimed at undermining the then Director of the Serious Fraud Office. Ms Collins was the Minister responsible for the SFO at the time."
He said an email had recently been given to his office.
"Ms Collins accepts these are serious allegations and that resigning as a Minister is the honourable step to take in these circumstances."
"This fits in to the category of a very serious statement. The statement could be completely wrong, it could completely misrepresent the situation. But I can't let that rest unresolved," Mr Key told reporters today.
"She certainly has a different version of events ... It's not tenable for me as Prime Minister to be given this email, or be alerted to it last night, and not to act ... It's not tenable for her to carry on as minister until these issues are resolved.
"This blogger has links to a great many people, and there are other people mentioned in this email.
I don't control Cameron Slater. He runs his own ship ... it's been no secret that he talks to Judith Collins.
There are always two sides of every story."
Mr Feeley stayed on in his role after the SSC investigation, but resigned in 2012, three years into his five-year term.
My Key said there was no indication from the SSC at this stage that Judith Collins did anything inappropriate.
He said if National was re-elected, Ms Collins would not be in a Cabinet minister.
"She won't be in cabinet, it doesn't mean she can't be at some point in the future ... but that would rely on her clearing herself of these allegations."
He said the email was given to his chief of staff Wayne Eagleson on an anonymous basis yesterday morning, and he saw it last night.
He said the resignation would have taken place regardless of the Oravida saga or any other incidents involving Ms Collins.
Mr Key would not say if Ms Collins could return to Cabinet immediately if she was cleared.
"She may need to take a little time to reflect as well ... there's been one or two slips in recent times."
Former SFO Director Adam Feeley
Ms Collins had referred former SFO chief executive Adam Feeley to the State Services Commission for celebrating the laying of charges against failed company Bridgecorp with a bottle of champagne recovered from Bridgecorp's former headquarters in 2010.
The commission found that this was ill-advised and poor judgement.
Mr Feeley was also criticised for distributing a biography of deceased failed businessman Allan Hubbard at a staff Christmas party.
In Mr Slater's email, released by Mr Key, Mr Slater says that he was speaking to Ms Collins, who was "gunning for" Mr Feeley.
"I also spoke at length with the Minsiter responsible today (Judith Collins). She is gunning for Feeley," the emails says.
"Any information that we can provide her on his background is appreciated. I have outlined for her a coming blog post about the mass staff turnover and she had added that to the review of the State Services Commissioner. She is using his review of these events to go on a trawl looking for anything else.
"It is my opinion that Feeley's position is untenable."
The email also mentions New Zealand Herald journalists who were running stories on the matter at the time.
The emails is sent to to multiple people including Carrick Graham, a public relations professional who is a central figure in Nicky Hager's book Dirty Politics.
Whale Oil blogger Cameron Slater would not comment when the Herald on Sunday visited his Flat Bush home just after Prime Minister John Key's press conference.
"Get off my property", he said from behind his closed front door. He then pulled the blinds of his two-storey townhouse shut.
Mr Key says Ms Collins resignation takes effect immediately, and Christopher Finlayson will be Acting Minister of Justice, Craig Foss will be Acting Minister for ACC, and Hekia Parata will be Acting Minister for Ethnic Affairs.
From Herald editor-in chief Tim Murphy, NZ Herald editor Shayne Currie:
"Two big stories the NZ Herald broke regarding Adam Feeley in 2011 were independent of Whale Oil, and sourced from other contacts. It was good journalism, and in the public interest.
"Reporters will have conversations with contacts from all sides of the political spectrum every day - it's our job to be fully aware of the source and their motivation, verify the information, and present it in a fair, accurate and balanced manner.
"Whale Oil was one of a number of people Jared Savage spoke to as the issue rolled on, to find out what he knew. Some information would have been shared, but none of it, in our view, pivotal or relevant to our inquiries."