Japan’s economy minister is to resign over allegations that he took bribes, dealing a blow to the prime minister, Shinzo Abe, and his attempts to revive the country’s faltering economy.

Akira Amari, a central figure in Abe’s economic programme, known was “Abenomics”, acknowledged receiving money from an unnamed construction company executive. But he denied taking bribes, claiming he had instructed his aides to record the envelopes of cash as a political donation.

Amari, 66, said he was resigning to prevent the allegations from distracting attention from the administration’s attempts to pull Japan out of chronic deflation.

“Japan is finally emerging from deflation … we need to pass legislation through parliament for steps to beat deflation and create a strong economy as soon as possible,” Amari told a packed news conference.

Wiping away tears as he announced his decision to quit, he added: “Anything that hampers this must be eliminated, and I’m no exception. I, therefore, would like to resign as minister to take responsibility” for what he claimed his aides had done.

Doubts over Amari’s future grew after Shukan Bunshun, a weekly magazine, alleged that he and his aides had accepted at least ¥12m (£70,500) in cash from the construction company executive.

In return, the magazine claimed, Amari’s office helped the firm receive government compensation arising from disputes over land ownership and waste removal at a building site.

Amari said the construction firm executive had visited him at the cabinet office with “gifts”, but denied that he had pocketed any cash, and had instead instructed his aide to record them as political donations.

Akira Amari bows at a news conference where he said he was resigning to take responsibility for a political funding scandal. Photograph: Yuya Shino/Reuters

The magazine later alleged Amari had twice pocketed envelopes containing ¥500,000 in cash, a claim he denied. “Putting money in my suit pocket in front of a visitor … would be lacking dignity as a human being,” he said.

About ¥3m of the cash had been spent by a secretary for “private use”. Two of his aides have since resigned, Amari said, adding that as their supervisor he felt obliged to take responsibility for their actions.

His resignation is expected to frustrate Abe’s attempts to steer the world’s third biggest economy out of deflation, amid signs that its recovery is petering out.

Last November, Japan entered its fourth technical recession in five years. Exporters are concerned about a strong yen, and Tokyo stocks have been battered by uncertainty over the Chinese economy. Amari was a key architect of Abe’s economic policy and last year led Japan in negotiations for the 12-nation Trans-Pacific Partnership free trade pact.

Abe is understood to have urged his ally to stay in his post; hours before his press conference, Amari himself told parliament he would “do my utmost” to continue as economy minister. “I will explain this situation to the Japanese people in a way that leaves no doubt,” he said. “I will continue to give my all to fulfil the responsibilities that I currently have.”

It wasn’t clear why Amari then decided to resign, but some observers have pointed to the possibility that other damaging revelations have yet to be published.