Sporadic violence has continued in Gujarat
Coal and Mines Minister Ram Vilas Paswan has quit over the government's failure to contain the violence, according to his party.
"We have been shamed by the incidents in Gujarat", Mr Paswan told the BBC.
"We have been mute spectators for too long", he said.
Mr Paswan said it would be a sad development if the censure motion is not passed.
The Indian Government led by Prime Minister Atal Behari Vajpayee has been criticised over Gujarat and faces a censure motion in parliament on Tuesday.
More than 800 people have died in clashes between Hindus and Muslims in Gujarat since late February.
Gujarat vote
Mr Paswan's resignation comes ahead of a key parliamentary debate on Gujarat, expected to severely criticise the government's handling of the crisis.
The opposition has been demanding the replacement of Gujarat Chief Minister Narendra Modi for failing to check the violence.
Voting line-up
Tuesday's parliamentary debate is not expected to unseat the Bharatiya Janata Party (BJP) led government - but could embarrass it.
A meeting of the BJP's allies on Monday ended with a pledge to support the government in the vote.
But at least three groups, the Trinamul Congress, the Janata Dal (United) and the National Conference, are still undecided about which way to vote.
Andt the regional Telugu Desam Party, which is outside the government, has not yet decided its stand.
The Telugu Desam is crucial as it is the largest party backing the BJP, but it has been very critical of the Gujarat violence.
But the BJP received a boost on Monday with another regional party, the Bahujan Samaj Party, saying it would back the government.
The BSP has 13 MPs and is poised to form a government in the politically influential state of Uttar Pradesh in alliance with the BJP.
For his part, Mr Vajpayee is confident of surviving the debate.
"Our government cannot be derailed. It is stable," he told a meeting of India's leading industrialists on Sunday.
Continuing violence
On Sunday, hundreds of people took part in a peace rally in Ahmedabad, among them Defence Minister George Fernandes and Narendra Modi, to plead for unity between Hindus and Muslims.
Mr Fernandes, who was representing the federal government, called on people to rid themselves of "all sorts of misunderstandings and feelings of anger and revenge".
But hours after the rally, violent clashes broke out between Hindus and Muslims.
Two people were shot dead by police in a suburb of Ahmedabad after clashes between Hindus and Muslims.
In another incident, two people were killed and five others injured when a mob hurled crude bombs at another group in Ahmedabad.
Sporadic violence has continued in Gujarat since February when Hindus targeted Muslims in widespread rioting.
It followed an attack by Muslims on Hindu activists returning from Ayodhya, where hardliners want to build a Hindu temple on the ruins of a demolished mosque.