But the race within the Welsh Labour Party has already begun to find a successor to Mr Davies.

Rhodri Morgan: "Obviously I'm a candidate"

Rhodri Morgan, who ran against Mr Davies in the recent competition to choose Labour's candidate for the assembly leader has already said he will stand again.

"How the new leader will be chosen is a matter for the Wales Labour party but obviously I am a candidate," he said.

Alun Michael, Mr Davies's successor as Welsh Secretary praised his predecessors "great personal dignity" in standing down as the Labour party's candidate to become first secretary of the Welsh Assembly.

Alun Michael: "Great sadness"

Speaking at a meeting in Cardiff with officials of the Wales Labour party Mr Michael said: "We have heard Ron's decision with great sadness and it must be a very difficult, and indeed devastating day, for Ron at the end of what has been a very difficult week for him.

"We think he has dealt with the issue with great dignity. What we have to do now is to take stock and move forward in order to address the real issues that the people of Wales want us to address, both in government and in the run-up to the assembly."

'Deavstating'

"Coming at the end of a period when he has campaigned so successfully for the establishment of the assembly, it must be devastating for him to have taken this decision but we can only show respect for the way he has done so."

Earlier it was disclosed that Mrs Davies had made it clear that she was standing by her husband.

Mrs Davies told her husband's Caerphilly constituency chairman Elwyn Morgan that she will be standing by her husband.

Mr Morgan said: "She and her family and friends are standing by Ron in his hour of need. There is no doubt that the constituency Labour party will want Ron to stay on as our MP."

'Proud'

The prime minister's official spokesman said: "Mr Davies first gave an indication of his intention to the prime minister this morning and informed him of the final decision he had come to after speaking further to his family and close friends.

Dr Liam Fox: "Inevitable decision"

"The prime minister feels desperately sorry for Ron, who can be hugely proud of the role he has played in the Labour government since last May.

The spokesman denied that Tony Blair had played any part in urging Mr Davies to stand down.

Tory constitutional affairs spokesman Dr Liam Fox said he believed Mr Davies's decision had become inevitable.

"The Labour Party now have a political vacuum in Wales to fill."

Support as MP

Mr Davies's constituency party secretary Derek Lamb said: "We are all very saddened but we understand Ron's decision entirely and we fully support him as our MP.

Derek Lamb: "Ron is being a realist"

"Ron is being a realist. Although he was the victim of crime and had done nothing wrong there was such a furore going on around him.

"It really is quite unfair. I spoke to him tonight for quite a while and he is understandably quite distressed about the whole thing."

Mr Lamb said he thought it was now unlikely that the ex-Welsh Secretary would attend tomorrow's scheduled meeting of the Caerphilly Labour Executive to give his side of the story.

"I shall be relaying what Ron has told me tonight. It is becoming very clear from the police reports that Ron was victim of crime and the intention was robbery and that was that.