LONDON - Work and Pensions Secretary Peter Hain, embroiled in a row over campaign contributions, resigned on Thursday after his case was referred to the police by electoral authorities, Hain's department said.

Hain's resignation will come as a blow to Prime Minister Gordon Brown who is struggling to boost his popularity after a string of bad headlines and as the economic picture turns sour.

Hain, a key member of Brown's ministerial team, said he was leaving his post to clear his name after the electoral commission decided to refer questions around Hain's campaign funding to the police.

"In view of the electoral commission decision today, I will be resigning to clear my name and I will be making a statement shortly," Hain said in a statement.

Brown's office said the prime minister had accepted Hain's resignation.

Hain has vigorously denied any wrongdoing despite the late declaration of donations of more than 100,000 pounds for his campaign last year to be elected deputy leader of the ruling Labour Party.

"Following discussions with the Metropolitan Police Service and the Crown Prosecution Service, the electoral commission has now referred matters to the Metropolitan Police for them to consider whether an investigation should commence," the commission said in a statement.

Police said they had received the file and that investigations would now begin.

"We have received a referral today from the electoral commission in connection with potential breaches of the Political Parties Elections and Referendums Act 2000 regarding donations received," a spokeswoman said.

"An investigation will now begin by detectives from the Specialist and Economic Crime Command led by Acting Commander Nigel Mawer," she added.