By Shelby Sebens

PORTLAND, Ore. (Reuters) - Oregon Governor John Kitzhaber resigned on Friday amid influence-peddling allegations involving his fiancée that have triggered a criminal corruption probe and led to a frenzy of criticism from prominent fellow Democrats, once strong allies.

Kitzhaber said his resignation would take effect next Wednesday, when Secretary of State Kate Brown would take over at the helm of the strongly Democratic Pacific Northwest state until an election can be held next year. She will become the nation's first openly bisexual governor.

"I understand that I have become a liability to the very institutions and policies to which I have dedicated my career and, indeed, my entire adult life," Kitzhaber said in a statement announcing his resignation. He has repeatedly denied any wrongdoing.

Elected to an unprecedented fourth term in November after a political career spanning more than three decades, Kitzhaber has been dogged for months by allegations that fiancée Cylvia Hayes used her role in his office for personal gain.

Those allegations snowballed last week amid media reports that Hayes had received $118,000 in previously undisclosed consulting fees in 2011 and 2012 from the Washington-based Clean Economy Development Center while also advising the governor on energy policy.

Kitzhaber did not reveal those consulting fees in annual disclosure filings. He said the couple did not see it as a potential conflict of interest and therefore did not feel it had to be reported.

In the aftermath of those revelations, Kitzhaber promised that Hayes would no longer have a policy role in his office. Nevertheless, calls grew from both sides of the political aisle for him to step down, as well as from the state's flagship newspaper, the Oregonian, which endorsed his re-election bid last year.

House of Representatives Speaker Tina Kotek and Senate President Peter Courtney, both Democrats, met with Kitzhaber on Thursday and urged him to resign.

Story continues

MOVE WELCOMED

Oregon Attorney General Ellen Rosenblum said the resignation would not affect an ongoing criminal corruption probe over a possible conflict of interest between Hayes' role as an unpaid adviser to the governor and her consulting contracts. Kitzhaber said he would continue to cooperate with the investigation.

Kitzhaber's decision was met largely with approval by the state's political leaders. U.S. Senator Ron Wyden of Oregon, a Democrat, said it would give Oregonians a government that can focus on their needs without the distractions of "investigations and charges and counter-charges."

Oregon House Republican Leader Mike McLane said: "I take no delight in John Kitzhaber's resignation but understand his decision."

Brown herself, in a brief statement, said it was "a sad day for Oregon" but she was confident lawmakers are ready to come together. "As you can imagine, there is a lot of work to be done between now and Wednesday."

Kitzhaber, a former emergency room doctor who has also served in both houses of the state legislature, noted the distraction the scandal had become but also expressed a note of defiance over the politics surrounding it.

"It is deeply troubling to me to realize that we have come to a place in the history of this great state of ours where a person can be charged, tried, convicted and sentenced by the media with no due process and no independent verification of the allegations involved," Kitzhaber said.

"But even more troubling – and on a very personal level as someone who has given 35 years of public service to Oregon – is that so many of my former allies in common cause have been willing to simply accept this judgment at its face value," he said.

Brown, who has commented publicly about her bisexuality, is married to a man and lives in Portland.

She was first appointed to the state House of Representatives in 1991, and in 2004 became the first woman to serve as Senate majority leader, according to a state profile.

(Reporting by Shelby Sebens in Portland, Oregon; Additional reporting by Courtney Sherwood in Portland, Oregon; Writing by Eric M. Johnson; Editing by Cynthia Johnston and Eric Beech)