Labour MPs who criticised John Prescott for keeping his grace-and-favour home have welcomed news he is to give it up.
Mr Prescott played croquet with staff on a department 'away-day' (Photo: Gary Trotter / isfphotos.com)
The deputy prime minister has been under fire for keeping Dorneywood after he was stripped of his department in the wake of admitting to an affair.
MP Stephen Pound, who said Mr Prescott's conduct had caused difficulties in the local elections, welcomed his statement.
But opposition parties say it would not end the row over him keeping his job.
Mr Prescott lost his department in last month's reshuffle on 5 May after his affair with diary secretary Tracey Temple became public.
He was allowed to keep his £133,000-a-year salary and perks such as Dorneywood and his flat at Admiralty House.
Tony Blair said the deputy prime minister would chair nine Cabinet committees and deputise for him on seven others.
'Relax and work'
Calls for Mr Prescott to give up Dorneywood increased when he was pictured playing croquet on the lawn at the estate with staff - supposedly when he was deputising for Mr Blair who was abroad.
Mr Prescott says the croquet game actually took place two days before Mr Blair went on holiday.
In his statement on Wednesday, Mr Prescott said that like previous ministers he had used Dorneywood as a place to relax and work.
But he realised it was now the subject of public controversy and concern by some MPs.
"I have accepted that my continued use of Dorneywood is getting in the way of doing my job in government," he said.
Mr Prescott told the Guardian newspaper the croquet photograph would have continued to haunt him if he had stayed on at the house in Buckinghamshire.
"It means that if I walk around that open lawn listening to music on my iPod, I'll be thinking about the cameras," he said.
"I will forever believe there will be another photograph in the Daily Mail or another paper saying 'here's Prescott lording it again'. It would never be relaxing again."
Aides said he had a "packed schedule" in Downing Street on Thursday.
A number of Labour MPs hit the airwaves to welcome the Dorneywood concession and voice support for the deputy prime minister.
Mr Pound, who previously said Mr Prescott's "sell by date" was approaching rapidly, described his statement as "dignified".
Environment Secretary David Miliband said Mr Prescott was "a big man",
He said Mr Prescott had decided "to give no possible suggestion that he has anything other than the interests of the country in his mind, that he's focusing on his job".
Labour backbencher Ian Gibson said he was "very glad" that Mr Prescott would be giving up Dorneywood.
But the Norwich North MP said he "feared" the media would be "trying to use Mr Prescott as a battering ram to get at the prime minister".
Fellow backbencher Andrew Dismore said he was happier now Mr Prescott had taken the "sting out of the tail" of criticisms.
Asked if Mr Prescott had done enough to survive, the MP said: "I think we have made a lot of progress. At the moment I think it is still difficult to say.
"We have got to wait and see how the story works its way through."
Labour MP Austin Mitchell said: "He's daft to [give up Dorneywood] because as soon as you throw a bit of red meat to the press pack and the media pack that's hounding him now they're gonna want more."
For the Tories, shadow chancellor George Osborne branded Mr Prescott a "complete irrelevance" whose political career was finished whether he kept his job or not.
Lib Dem deputy leader Vince Cable said leaving Dorneywood did not solve the "underlying problem" that Mr Prescott had been "half-sacked" by the prime minister and could not be taken seriously.