Prime Minister John Key this morning accepted Phil Heatley's resignation from his cabinet portfolios he issued this statement.

Prime Minister John Key said today he had accepted with regret the resignation of Housing and Fisheries Minister Phil Heatley from his ministerial portfolios.

"Mr Heatley tendered his resignation to me this morning and I will be advising the Governor-General to accept it," says Mr Key. "Mr Heatley has also asked that the Auditor-General conduct an audit into his ministerial expenses.

"My officials have been working with the Audit Office since yesterday when this latest issue arose, and the investigation will start this afternoon. The purpose of the audit is to confirm the appropriateness of the expenses claimed by Mr Heatley against Vote Ministerial Services.

"It came to my attention yesterday that the documentation used to support Mr Heatley's expenses claim for $70 in Christchurch last year was incorrect.

"The expenses claim characterised the spending as "Minister and Spouse: dinner". The actual credit card receipt was notated by him as 'Minister and Spouse' for 'Food and Beverage'. (documents attached)

"The credit card was used for two bottles of wine for his and his wife's table at the National Party Conference.

"I have asked Mr Heatley to explain the inconsistency and he has indicated to me that this was an unintentional error on his part, and he had not sought to mislead Ministerial Services in the characterisation of his claim.

"However, he feels that he has not lived up to the high standards required of a Minister and has resigned his portfolios.

"I expect high standards from my Ministers, but I'm also prepared to accept that everyone is human and from time to time, people make mistakes.

"I have no reason at this stage to believe that Mr Heatley has been dishonest. However, it is important that the Auditor-General investigates this issue to ensure that public money is spent appropriately.

"In addition to the audit of Mr Heatley's expenses, I have asked Ministerial Services to work with the Auditor-General to look at the systems and processes for dealing with ministerial expenses to ensure we are doing everything possible to make sure the rules are clear and are being followed.

"For the time being, I have asked Maurice Williamson and David Carter to act in the Housing and Fisheries portfolios respectively."