David Blunkett's resignation leaves Tony Blair as a "lame duck" with few allies in Cabinet, Conservative leader Michael Howard has said.
He told MPs the prime minister had endured an "extraordinary week" which had seen the "seepage of his authority turn into a haemorrhage".
Mr Blair said Mr Blunkett had resigned "with no stain of impropriety".
Lib Dem leader Charles Kennedy said it was "absurd" ministers could ignore advice in the ministerial code.
'Decent and honourable'
Before taking questions, Mr Blair paid his own personal tribute to Mr Blunkett, who resigned as work and pensions secretary on Wednesday following controversy surrounding his business activities.
The prime minister said: "I would like to say that whatever mistakes he has made, I've always believed and believe now that he is a decent and honourable man, who has contributed a great deal to his country, who has overcome immense challenges that frankly would have daunted the rest of us.
"He can be proud of his record in British public life,"
Mr Howard said Mr Blair was a prime minister "in office but not in power".
He added: "We all acknowledge the honourable way in which Mr Blunkett has decided to resign and I pay tribute to him for that.
"But the key question now is for you. Do you think that in your handling of this affair, your judgment has been at fault in any way?"
Mr Blair said he thought allegations against Mr Blunkett had not "warranted his dismissal" and that there had been a "frenzy" at Westminster.
As the political world reacted to the resignation, Trade Secretary Alan Johnson said it was "a real blow" and called Mr Blunkett a "thoroughly decent man".
Lib Dem work and pensions spokesman David Laws called the departure "inevitable and justified".
Shadow education secretary David Cameron said it was a "personal tragedy" for Mr Blunkett which would "reflect badly" on the government.
Scottish National Party leader Alex Salmond said: "It is the prime minister's judgment rather than that of David Blunkett that is in question.
"It is the end for David Blunkett; it may be the beginning of the end for Tony Blair."