Barry Legg is a right-winger

Senior Conservatives are fighting to minimise the damage caused by the departure of the party's chief executive Barry Legg.

Mr Legg's ousting came after he had been in the job just three months and is a personal blow to leader Iain Duncan Smith who appointed him.

It is a further setback for the Tory leader whose position had been bolstered by better than expected results in last Thursday's local elections.

Mr Legg's resignation pre-empts next week's meeting of the Conservative Party board which had been expected not to grant its approval to the ex-MP's appointment.

Members of the board were dismayed they were not consulted when Mr Duncan Smith opted to appoint Mr Legg - a close political ally - to the job.

That controversial move effectively became an issue of Mr Duncan Smith's authority.

At the weekend, Tory MPs will gather for an "away day" in Buckinghamshire, with Mr Duncan Smith hoping he has drawn a line under the matter.

Once again a personal appointee has been the source of problems for the Tory leader The BBC's Nick Assinder New blow for Tory leader Profile: Barry Legg

Mr Legg has also stepped down from his role as the Tory leader's chief of staff.

A Conservative Party statement said the post of chief executive was being abolished after a "strategic review" of how party headquarters was organised.

"Given the changed position, Mr Legg has offered his resignation, which the board has today accepted," it said.

Mr Duncan Smith said he was "sorry" to see Mr Legg go.

Mr Legg said: "I am sorry to be leaving so soon and do so regretting that I have not been able to do more."

'Unconstitutional'

The 54-year-old was appointed in February to replace Mark MacGregor, a keen supporter of Michael Portillo's socially liberal politics, in a move generally viewed as a snub to so-called party "modernisers".

At the time it was also announced that Mr Legg would be taking on the role of chief of staff to Mr Duncan Smith.

This led to claims that not only was the Tory leader adopting a bunker mentality, but also acting unconstitutionally by taking a decision that should have been the preserve of the Conservative Party Board.

Blunt: MPs should decide in next two weeks over leadership challenge

The shake-up of officials sparked open dissent from leading backbenchers, including Mr Portillo, but traditionalists were delighted.

Crispin Blunt, who resigned from the Conservative frontbench with a withering attack on Mr Duncan Smith last week, said Mr Legg's departure avoided a "running sore" developing.

Mr Blunt told BBC Radio 4's Today programme: "What is going to happen now is my colleagues in the parliamentary party have got to decide, I think in the next two weeks, whether or not Iain is the best person to lead us into the next general election."

He did not know whether there were the 25 Tory MPs needed to trigger a no confidence vote in the leadership.

Controversial past

The resignation comes after senior Conservative backbencher Derek Conway called for Mr Legg to be sacked following revelations broadcast on Today about scandals he was involved in.

As a Westminster councillor, he played a key part in a decision, later condemned by a public inquiry commissioned by the council, to move homeless families into two London tower blocks known to be riddled with asbestos.

As company secretary of food company Hillsdown Holdings, Mr Legg was also involved in a decision to remove an �18m surplus from a pension fund, which a High Court judgment described as unjust and unauthorised.

The company was ordered to repay the money with interest.

Mr Legg told Today he had been over-ruled after trying to persuade his company to give pensioners some of the surplus. He had no recollection of the council decision.

His departure was welcomed by Mr Conway, who said it was the right way to resolve the problems.

"Appointing your chums to jobs often ends in tears in politics and in my experience nearly always does," he said.