The Prime Minister has accepted Lord Keen's resignation from his role as justice minister and top law officer.
The Advocate General for Scotland tendered his resignation this morning after mounting pressure over the government's UK Internal Market Bill.
The peer told the House of Lords the bill did not break international law, in direct contradiction with the government and Northern Ireland minister Brandon Lewis.
Now Downing Street has confirmed his resignation.
A spokesman said: "Lord Keen has resigned as Advocate General for Scotland. The Prime Minister thanks him for his service."
Speculation is now growing about who could replace him, with government sources agreeing it will be a difficult job to fill.
Scottish Conservative leader Douglas Ross said: “I respect Lord Keen’s decision. He has served admirably as Advocate General for Scotland, including during my time as Scotland Office minister.
“The UK Internal Market Bill is essential to protect the 545,000 Scottish jobs that rely on UK trade. It will now go through a period of amendment and debate at the committee stage.”
Scottish Secretary Alister Jack also paid tribute to Lord Keen, and wished him “the very best for the future.”
Joanna Cherry, SNP MP and QC, said he had done the right thing.
The SNP’s Justice and Home Affairs spokeswoman said: “I am pleased that Lord Keen has finally decided to do the right thing and offer his resignation. No Scottish law officer could possibly reconcile the lack of regard Boris Johnson and his government has for the rule of law with his or her obligation as an officer of the Scottish Courts.
“It shows, yet again, that this Tory government cannot be trusted.
“The UK government will find it hard to find any member of the Scottish Bar to replace Lord Keen as Advocate General as long as it is intent on breaking international law.”
Lord Falconer, Labour’s Shadow Attorney General, said the “farce” surrounding the Internal Market Bill had shamed “the entire government”.
He said: “This has been a week of chaos from the government’s own law officers, whose legal advice has been renounced by its own government and the voice of the law officers has been muted, and their authority is completely shot.
“This has been a farce that shames the entire government.”
Lib Dem Lord Menzies Campbell said Lord Keen’s decision cast doubt on the future of the bill.
He said: “This honourable decision is a crippling blow to the credibility of the government and the prime minister in particular
“Richard Keen has looked uncomfortable for days in loyally defending the government position. But his resignation raises very substantial questions for the Attorney General and the Solicitor General in the Conservative government.”
“The future of this bill must now be in severe doubt.”
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