Leipzig's 2012 Olympic bid chief Dirk Thaerichen has stepped down following allegations that he worked for the former East German Stasi secret police, according to a spokeswoman for the city.
Although Thaerichen officially gave up his post only temporarily, he is expected to be replaced when the supervisory board of the bid next meets on 18 October.
The leading candidate to take over the job is former Olympic swimmer Michael Gross.
Leipzig, which is in the formerly communist eastern part of Germany, beat Hamburg, Frankfurt, Dusseldorf and Stuttgart for the right to bid for 2012.
The decision was seen as a major boost for the depressed region, which is still struggling to catch up with the more prosperous west more than a decade after German re-unification.
Michael Beleites, the official in charge of investigating Stasi records in the state of Saxony, had demanded Thaerichen step down.
Beleites argued that Leipzig would only have a chance if it separated the image of east German sport from the Stasi and from doping.
East German athletes were systematically but often unwittingly doped as part of efforts to use sport to promote the communist state and thousands suffered from health problems.
Thaerichen has denied allegations that he joined a Stasi guard unit shortly before the fall of the Berlin Wall in 1989 and that he aimed for a career in the ruling Communist party.
Harald Lochotzke, head of the committee promoting Rostock, which is aiming to host the sailing events in 2012, resigned on Tuesday after he was also linked to the Stasi.
Leipzig and its eight other rivals in the race for 2012 must submit a detailed questionnaire to the International Olympic Committee in January.
A final decision on the host city will be taken in July 2005.
Paris, New York, Moscow, Istanbul, Havana, London, Madrid and Rio de Janeiro are also bidding.