The top aide to Canadian Prime Minister Stephen Harper has resigned over his role in an mounting expenses scandal which is threatening to undermine the Conservative government.

Nigel Wright, Harper's chief of staff, quit on Sunday after secretly giving a C$90,000 ($87,000) cheque in February to Mike Duffy, a member of the upper Senate chamber, to help him cover living expenses he had improperly claimed. News of the gift leaked on May 14.

Opposition legislators said the cheque broke ethics rules that forbid senators from taking presents and made a mockery of the government's repeated promises to increase accountability in Ottawa. Duffy, a former national television journalist, resigned from the Conservative caucus on Thursday.

Officials told reporters on Friday that the chief of staff - who says he did not tell Harper about the cheque - would be staying.

'Regret the impact'

"In light of the controversy surrounding my handling of matters involving Senator Duffy, the prime minister has accepted my resignation," Wright said in a statement.

"I regret the impact of this matter on the government, our caucus, and all of my colleagues," added Wright, a businessman who had been on secondment to Harper's office from private equity firm Onex Corp. He started work on January 1, 2011.

The expenses scandal is one of the biggest crises to hit the Conservatives since they took power in early 2006 promising to clean up government after a series of scandals helped bring down the previous Liberal administration.

The Conservatives are in "full-out political panic", said Charlie Angus, a member of parliament and the ethics critic for the official opposition New Democratic Party. Angus said Wright's resignation would not halt the NDP's call for an official probe into the matter.

Angry voters

In a sign of the potential damage the scandal could do to the government, Conservative MP Brent Rathgeber told Global Television that his voters were angry.

"Any suggestion that taxpayers are treated disrespectfully is met with significant concern, I would say even angst," said Rathgeber, who represents a constituency in the western province of Alberta, a ruling party stronghold.

Pamela Wallin, another Conservative senator whose expenses have been questioned, quit the caucus late on Friday. Wallin is also a former television journalist.

Opinion polls show the Conservatives trailing the Liberals, who have steadily grown more popular since Justin Trudeau - the telegenic son of former Liberal prime minister Pierre Trudeau - was elected leader last month.

Harper said he had accepted Wright's resignation with great regret. The next election is not due until October 2015 and the Conservatives have a comfortable majority in the House of Commons.