The chairman of the Waikato District Health Board, Bob Simcock, has resigned, effective immediately.
Health Minister David Clark said Mr Simcock had resigned as chair and as a district health board member.
He said he had accepted the resignation, which came this afternoon, and said it was the right decision under the circumstances.
It follows growing pressure on the DHB over the expenses of former chief executive Nigel Murray, and came 24 hours after he received the final report from the Office of the Auditor-General on Dr Murray's spending.
Dr Murray is being investigated by the State Services Commission over $218,000 spent on travel and expenses during his three years there.
The Serious Fraud Office also confirmed today it had a preliminary inquiry under way.
Dr Murray had been on a salary of $560,000 before his resignation early last month.
Mr Simcock faced criticism over his hiring of Dr Murray, with senior doctors and a former MP saying they had warned him against it.
Mr Simcock was also responsible for signing off all expenditure.
Mr Simcock previously maintained he was not to blame for over-spending by Mr Murray, and said he would not resign.
DHB deputy chair Sally Webb has accepted the role as acting chair and said many would be sad to see Mr Simcock go.
"I'm sure that that decision actually will be quite a shock for a lot of people in the organisation because Bob has been a well-respected chair," she said.
"However, he's made his decision and I respect that."
In a statement, Mr Simcock said it was a very hard decision but he was satisfied both he and the board had "acted responsibly and without reproach at every stage".
"We followed agreed DHB guidelines and processes throughout to ensure good governance and that the best interests of Waikato DHB were upheld without question." he said.
"Nonetheless, despite our best intentions and actions, a lot of the hard work and goodwill achieved by the team at Waikato DHB was undone by the unfortunate and unauthorised actions of the former chief executive.
The priority for the DHB now was to get back to business as usual and for the board to support its interim chief executive "without any further distractions being played out publicly", Mr Simcock said.
Waikato District Health board member Dave McPherson said he felt the board only hired Dr Murray because there was no one else suitable at the time.
"I wasn't on the board at that time so I didn't hear the conversation.
"But it was clearly a decision that wasn't correct - and not just in hindsight - I think they had the reason to know it wasn't correct at the time," he said.
"I don't believe that all the warnings given to the chair at the time were then passed on to the then-board members."
Health Minister David Clark said it was still important to fully review the findings of the State Services Commission investigation into allegations of wrongful expenditure of public money by Dr Murray.
He said he believed an interim report on it would be provided early next year.