(Adds PM, analyst comments)

PUTRAJAYA, Malaysia, Jan 2 (Reuters) - Malaysia's health minister resigned on Wednesday, a day after he shocked the nation by admitting he was the man in a widely circulated sex video.

Prime Minister Abdullah Ahmad Badawi said he had accepted the resignation of Health Minister Chua Soi Lek, who apologised after two lengthy DVDs hit the streets showing him engaging in sexual acts with an unidentified woman.

The scandal is the latest in a series of problems plaguing Abdullah's government, which has been widely expected to call a snap election in the coming weeks.

"After I made my confession, I had hoped Malaysians would be able to accept my apology," he said. "Unfortunately, from the feedback I received, I observed that Malaysians cannot accept it."

"Some Malaysians have a holier-than-thou attitude," Chua, a doctor by training, told a packed news conference at his office. "At the end of the day, it just tells you that honesty sometimes does not pay."

Chua, who said the woman was a "personal friend", had insisted on Tuesday he would not resign over the issue, drawing a sharp rebuke from people within and outside government.

The New Straits Times, controlled by Abdullah's ruling party, said in a commentary Chua should quit to save the government from further anguish.

Abdullah, a devout Muslim, won a record mandate in 2004 polls on a pledge to clean up the government and fight corruption. "For a top politician you can't continue in power when you are seen naked," said political analyst Ooi Kee Beng.

ABDULLAH'S HEADACHES

The prime minister said he had been shocked by the news but stressed that the episode was unlikely to undermine his coalition's election preparations.

"He (Chua) has taken responsibility over what had happened. I feel it was an appropriate decision taken by him," he said, adding that Chua's position would be filled later.

Chua, a father of three, said he did not make the DVDs. Newspapers said they were closed-circuit recordings made two years ago in a hotel room. One DVD lasted 56 minutes and the other 44 minutes.

Police were probing the case, trying to establish who made the recordings and how four cameras came to be in the room of a hotel in the southern state of Johor, the New Straits Times said.

Abdullah's four-year-old administration has been beset with major problems lately, a sign he may be forced to delay elections beyond March, when many had expected them to take place.

In late November, more than 10,000 ethnic Indians took to the streets in an unprecedented protest over racial discrimination. (Additional reporting by Syed Azman and Niluksi Koswanage; Writing by Jalil Hamid; Editing by Roger Crabb)