As a champion of greater European Union integration, he became a hate figure for the Eurosceptic right.

The Sun newspaper branded him "the most dangerous man in Europe" and on Friday, splashed its front page with the headline: "Ve haf vays of making you quit".

But "Red Oskar" as he was known, was also a thorn in the side of Blairite pro-Europeans.

He infuriated the UK Government with demands last year for EU tax harmonisation - leaving Downing Street to fight off damaging press comment that Britain would be forced to put up taxes to levels of other member countries.

On the night of his resignation, the official line from Number 10 was that his departure was "a matter for the German government".

In private it is different. There is little doubt that Tony Blair and Chancellor Gordon Brown, both considerably to the right of Mr Lafontaine, will be glad to see the back of him.

As well as being a keen European integrationist, the former minister is also an unashamed modern-day Keynesian.

Mixed reaction at Westminster

The former Conservative Prime Minister John Major said the resignation could be good news for European economy as a whole.

Tony Benn: "No more dangerous than Keynes"

Lafontaine has been the grit in the German oyster, he believed. It seems clear that there has been a serious policy division between him and the German chancellor.

Mr Major said: "I hope his resignation will mean a clear and coherent German economic policy from now on, since this is important not only for Germany, but across Europe."

But the veteran Labour MP and former Cabinet minister Tony Benn said the ex-minister should not be classed as a "villain".

"This is a victory for the deflationary against the reflationary forces in the German government.

"He is no more dangerous than Keynes. It is because he is so far to the left of every political party in Britain at the moment that he is being presented as a villain," said Mr Benn.

"If it is shown that Lafontaine could not get the [European] Central Bank to do what had to be done to deal with the mounting problem of unemployment, it will have a very big effect."

Gerald Howarth: "Grateful for his frankness"

Conservative MP Gerald Howarth, a prominent Eurosceptic, felt that at least Mr Lafontaine was honest about his ideas for a united Europe, and was not trying to sneak it in by the back door.

"He has done more than any other elected politician to spell out in words of one syllable what the objectives are of so many continental politicians: namely, the creation of a United States of Europe," he said.

"He has articulated when so many others have tried to pull the wool over people's eyes, particularly the eyes of the British people.

"We must be grateful for his often frank declaration that his and his colleagues' intention was to create a United States of Europe. The battle is now on to preserve the nation state."

And even Tam Dalyell, the independent-minded Labour MP for Linlithgow, said: "As a pro-European, I am, from a distance, a little relieved."