The continuing drip, drip effect of unsubstantiated leaks, allegations and speculation regarding my former employment is now having an adverse impact

Mike German

"What I have done is to protect the assembly and the government of Wales," he said.

"Our assembly is a very fragile, new being and we went in to partnership to ensure we delivered good things, so people could say they have seen a difference.

"We were beginning to achieve that - there was a change in the mood about the assembly and I didn't want to damage that because it's more important than anything else."

Formal investigation

Mr German stood down last week while police carry out a formal investigation into his past business dealings.

On Friday he told BBC Radio 4's Today programme the matter was "distracting" to the work of the assembly so he thought it was better to go.

He stressed he would return when the investigation was over, and again rejected any allegations of wrong-doing.

Mr German will continue to serve as an Assembly Member and as leader of the Liberal Democrats in the assembly.

His party colleague Jenny Randerson has taken his place as acting first minister, while First Minister Rhodri Morgan will resume control over economic development.

Mr German's resignation letter to Rhodri Morgan

The police inquiry centres on the Welsh Joint Education Committee's (WJEC) exam board unit which Mr German headed.

It follows complaints about the use of a corporate credit card and overseas trips by the European unit.

Mr German had resisted numerous calls for his resignation, made since the police were first called in by the WJEC.

He has argued he has been the victim of a political witch hunt by opponents opposed to the Lib-Lab coalition government in Wales.

The allegations "came out just at the time when we were having discussions about entering the coalition," he told Today.

"And it resurfaced again just at the beginning of the general election campaign.

The WJEC called in South Wales Police

"It doesn't take a genius to put two and two together to see that there's a connection between those things."

In his resignation letter to Labour First Minister Rhodri Morgan, Mr German said the constant stream of allegations against him was harming the assembly.

"The continuing drip, drip effect of unsubstantiated leaks, allegations and speculation regarding my former employment is now having an adverse impact," he said.

Welsh Conservative leader Nick Bourne said it was "entirely right" that Mr German had gone, but said he should have stepped aside sooner.

Plaid Cymru President Ieuan Wyn Jones agreed and rejected the claims of a witch hunt.

Mr Morgan, who has consistently defended Mr German, said the move was "honourable".

He said he was confident the move aside was temporary, and was looking forward to Mr German's return to the cabinet.