Chris Huhne is facing a possible jail sentence after admitting lying to police over a speeding offence committed a decade ago.
The former Energy Secretary pleaded guilty to perverting the course of justice over claims that his ex-wife Vicky Pryce took penalty points so that he could avoid prosecution.
He announced he was quitting as an MP shortly after entering the plea on the first day of the pair's trial at Southwark Crown Court in London.
The dramatic move came just days after he denied the offence at a preliminary hearing last week and sets up a bitter by-election fight in his constituency of Eastleigh, Hampshire.
Pryce, a former Government economics adviser, denies a charge of perverting the course of justice. Her case was adjourned until Tuesday but is expected to proceed.
In a short statement outside the court, Huhne said: "I have pleaded guilty today. I am unable to say more while there is an outstanding trial.
"Having taken responsibility for something which happened 10 years ago, the only proper course of action for me is to resign my Eastleigh seat in Parliament which I will do very shortly.
"That is all I can say today."
Perversion of the course of justice carries a maximum sentence of life imprisonment, but those involving driving offence have often resulted in jail sentences of between six and 12 months.
Huhne, 58, once seen as a future Lib Dem leader, has been released on unconditional bail and will be sentenced at a later date.
Mr Justice Sweeney made clear in court: "You should have no illusions whatsoever as to the sort of sentence that you are likely to receive."
The politician arrived at the court on Monday with his girlfriend Carina Trimingham, who he admitted having an affair with in 2010.
It was only after their relationship was exposed and his 26-year marriage to Pryce fell apart that the penalty points claims emerged.
Ms Trimingham, a PR adviser, watched from the public gallery as Huhne entered his plea.
The charges date back to March 2003 when Huhne's car was caught speeding on the motorway between Stansted Airport and London.
His legal team had tried to have the case thrown out, arguing it was "at best gossamer thin" and the evidence was circumstantial.
His barrister John Kelsey-Fry, who reportedly charges £20,000-a-day for his services, also tried to have the trial stayed because of an abuse of process.
He claimed a fair trial was impossible because the offence was committed so long ago, the original forms had been destroyed and there was so much adverse publicity.
Days of legal argument - under strict reporting restrictions - ensued as prosecutors insisted the combination of evidence did point to Huhne being the one behind the wheel and that he should go to trial.
The judge eventually ruled that the trial should go ahead, at which point Huhne pleaded not guilty. But on Monday, as he prepared to face a jury, he changed his mind and admitted his crime.
Details of his broken relationship with his son Peter following his marriage break-up also emerged as a series of text messages between the pair were read out in court.
In June 2010, Peter, then 18, rebuffed his father's attempts to make contact, saying: "I don't want to speak to you. You disgust me." He later wrote: "You are the most ghastly man I have ever known."
On Christmas Day, Huhne sent a message saying: "Happy Christmas. Love you. Dad." Peter replied: "Well I hate you so f*** off."
Three days later, Huhne wrote to congratulate him but his son said: "Leave me alone. You have no place in my life... Don't contact me again. You make me feel sick."
In May 2011, Peter referred to the penalty points, writing: "Are you going to accept your responsibility or do I have to contact the police and tell them what you told me?".
When he stood down from the Cabinet last February, Huhne had vowed to clear his name.
At the time, he said: "I am innocent of these charges, and I intend to fight this in the courts, and I am confident that a jury will agree."
His departure from the Commons 12 months on completes the fall from grace of one many had seen as Nick Clegg's natural successor.
After the dramatic developments, Mr Clegg said: "This is obviously an extremely serious matter and it is essential that the legal process is now allowed to run its course.
"I am shocked and saddened by what has happened but I believe that Chris Huhne has taken the right decision in resigning as an MP."
The by-election fight for the Eastleigh seat will be the first since the coalition formed where the Tories and Lib Dems are the main contenders.
Huhne won with a majority of 3,864 in 2010 but it is viewed as a key target for the Tories.
UKIP leader Nigel Farage has also previously stood for the area and could use the opening to make another run for Parliament.
Party sources said UKIP would be fielding a candidate in Eastleigh and Mr Farage would consider the situation, adding that the constituency was "very close to his heart".