Tory MP Derek Conway, who was reprimanded for overpaying his son parliamentary allowances, has announced he will not fight the next election.
Mr Conway apologised after being reprimanded.
The Old Bexley and Sidcup MP had the Tory whip withdrawn on Tuesday after the critical report by the Commons Standards and Privileges Committee.
It ruled the MP should pay back £13,161 of the money paid to his son. He now faces a 10-day Commons suspension.
Mr Conway said: "I have concluded that it's now time to step down."
He said he did not wish his "personal circumstances to be a distraction" from David Cameron's leadership.
"I have had tremendous support from my local party, my family and friends, but I have concluded that it is time to step down," he said in a statement.
"Since joining the Conservative Party nearly 40 years ago I have had the privilege of serving in public office since 1974 and have done so to the best of my ability.
"I have advised the chief whip and the chairman of my local Conservative Association that I shall not seek to continue as the Conservative Party candidate for Old Bexley and Sidcup at the next election.
"Though not an original supporter of David Cameron for the leadership of my party, I believe that he has shown he has both the ability and the character to be prime minister of our country.
Complaints about Henry Conway could be investigated.
"I do not wish my personal circumstances to be a distraction in any way from the real issues that have to be addressed."
Mr Conway has already apologised unreservedly to MPs for "administrative shortcomings and the misjudgements" he made over the employment of his younger son Freddie while he was a full-time student in Newcastle.
The standards and privileges committee found the arrangement was "at least, an improper use of parliamentary allowances; at worst, it was a serious diversion of public funds".
MPs are due to vote on Thursday on the recommendation that Mr Conway be suspended from the Commons for 10 days and required to pay up to £13,161 of the cash.
He also faces a possible police inquiry and a further probe into complaints about his other son, Henry.
Scotland Yard has confirmed it has received a letter from Duncan Borrowman, the Lib Dem rival for Mr Conway's seat, asking officers to examine whether a fraud has been committed.
Meanwhile, Mr Cameron has described the use of public funds to pay Freddie Conway as a parliamentary researcher while he was a student Newcastle as "unacceptable".
In an interview with the BBC, he indicated he supported calls for greater transparency on who is employed by MPs. He said: "All MPs, if asked questions about who they employ in their offices, should give straightforward, clear and transparent answers."
The Liberal Democrats say they are looking at how their MPs could be more transparent about who they employ.
In a statement, they said: "Given that this is something which is not currently a reporting requirement we would have to look into the implications this would have in terms of data protection legislation."
Mr Conway's decision came as Sir Christopher Kelly, chairman of the committee for standards in public life, said banning MPs from employing relatives "could be the right thing to do".
But while he said he understood calls for a complete ban, this could also be a "rather harsh answer to the problem".
There is nothing to stop MPs employing members of their families and it is thought that more than 40 do.