Wendy Alexander has resigned as leader of the Scottish Labour Party after being found guilty of breaking Parliamentary rules.

Holyrood's Standards Committee had voted to recommend she be barred from Parliament for one day in the autumn for failing to promptly declare donations to her leadership campaign last summer.

Ms Alexander said the row had become a "distraction" from the real issues and that she been the target of a political witch-hunt.

Meanwhile, veteran Labour MP David Marshall announced he is to quit the House of Commons for health reasons, raising the possibility of a by-election in Glasgow East.

It piles further pressure on Prime Minister Gordon Brown following last week's Henley by-election drubbing.

Ms Alexander said: "I acted in good faith upon the basis of written advice from the parliamentary authorities."

She said said she was the victim of a "partisan" decision by the Standards Committee and claimed there had been a "breach of natural justice".

But Ms Alexander also said: "I judge this issue has become too much of a distraction from the real issues that should dominate our public life."

Gordon Brown, a close ally of Ms Alexander, thanked her for her work in "rebuilding" the Scottish Labour Party since the last elections as well as her commitment to devolution and her part in establishing the Scottish Parliament.

He said: "Her dedication to social justice can never be doubted and her contribution - which has been outstanding over the years - will be greatly missed."

Ms Alexander is standing down as leader of Labour in the Scottish Parliament but will remain an MSP.

Announcing her decision, still hoarse from a throat infection, Ms Alexander said: "The process of successive SNP inspired complaints and investigations has been unrelenting and will continue into the autumn, almost a year after the initial complaint.

"My pursuers have sought the prize of political victory with little thought to the standing of the parliament. Some may feel they have achieved a political victory but wiser heads will surely question at what price."

Speaking on the day after her 45th birthday, Ms Alexander, who is the sister of international development minister Douglas Alexander, said it as clear that "vexatious" complaints would dominate headlines as long as she remained and went on: "I cannot ask Labour supporters in Scotland for further forbearance."

© Independent Television News Limited 2008. All rights reserved.