New South Wales Police Minister Matt Brown has resigned just three days into his new portfolio over allegations of inappropriate conduct during a wild Budget night party in his Parliament House office three months ago.
The new Premier Nathan Rees has accepted Matt Brown's resignation and will make a statement later today.
Mr Brown quit state Cabinet last night after the Australian newspaper published accusations on its website.
It quoted an unnamed witness who said they saw Mr Brown dancing in his underwear and simulating a sex act on Wollongong MP Noreen Hay.
But Ms Hay has denied the accusations, saying nothing sordid happened.
"Whilst I was in that room, Matt Brown had his clothes on," she said.
"I did leave the room and come back - I did that a couple of times."
She says it was a light-hearted, jovial night.
"I just think that this is, you know, dirty politics," she said.
"From what I could see on the night everyone was light-hearted, it was pleasant, people were laughing, joking. It certainly wasn't anything sordid."
The ABC put the allegations to a spokesman for Mr Brown, who said he could not confirm the events had occured.
He said the member for Kiama resigned because it was unacceptable to host a party at Parliament House.
He says Mr Brown regrets any embarrassment he has caused the new Premier.
Mr Brown is due to make a statement in his electorate later today.
'Unacceptable'
The Deputy Premier, Carmel Tebbutt, says she first became aware of the allegations involving Mr Brown this morning.
Ms Tebbutt says Mr Brown's behaviour was inappropriate and the Premier had no choice but to accept the resignation.
"The Premier made it very clear to all of us on our first day he has high standards of behaviour and he expected all of us to adhere to those high standards of behaviour," she said.
"The Premier set the benchmark all ministers must meet that benchmark and he had no option but to accept the resignation of Matt Brown."
