James Purnell, the work and pensions secretary, last night dealt a ­monumental blow to Gordon Brown's chances of ­holding onto office when he dramatically announced he was quitting the cabinet and asking Brown "to stand aside to give Labour a fighting chance of winning the next election".

His statement, in effect declaring Brown unelectable, will further weaken the prime minister's waning authority and takes the challenge to his leadership to a dangerous level.

Purnell made his sensational move after polls closed in the local and European elections - in which Labour was subsequently decimated across the board, informing Brown by phone last night. It prompted a furious reaction in Number 10 with ministers saying Purnell was profoundly mistaken.

Brown had no inkling that Purnell was going to quit, since the work and pensions secretary shrouded his move in secrecy in order to prevent No 10 mounting a pre-emptive strike against him, or seeking to challenge his motives.

A spokesperson for Purnell said: "He feels Gordon should now stand aside to give the party a fighting chance of winning the next election. He is not seeking the leadership nor acting with anyone else. This is not about jobs or careers."

The source added: "He [Purnell] has made the decision in the last few weeks – he's always been very loyal, but he now feels he can no longer go out and defend the prime minister. That is why he has taken the difficult decision to resign."

No 10 said it was disappointed Purnell had chosen to tell newspapers before telling the leader of the Labour party.

Liam Byrne, the cabinet office minister said Purnell was profoundly mistaken. He warned: "Let us remember one thing if there is a debate, if there is a leadership contest, if there is a change of leader is the British public really going to wear the Labour party carrying on in office, is it not going to ask for an immediate general election. Having just put on not our most united front, that election will not be good for the Labour party." David Miliband, the foreign secretary, told the BBC last night he would not be resigning from the cabinet and that he did not agree with Purnell's decision.

Despite that Purnell's move is a blow to Brown because No 10 believed it was succeeding in isolating the cabinet-level rebellion after Hazel Blears, the ­communities secretary, quit on Wednesday in a badly timed move that alienated many party activists since it was taken only 48 hours before yesterday's elections.

Purnell, a confirmed moderniser, decided, in contrast to Blears, that he would wait until polls closed last night before making his announcement so that he could not be accused of damaging Labour's chances in the elections.

Unlike Blears, Purnell criticised Brown's electability in his resignation. Purnell, seen as a possible future ­leadership ­candidate, said he would not be seeking the leadership if it became vacant.

Alan Johnson, the health secretary, remains favourite to succeed Brown if the prime minister is toppled, but Purnell gave no indication of his preference as to who should succeed Brown, or how that could be achieved. He emphasised he was acting wholly alone and not in concert with any other cabinet ministers. But his decision to resign means there is a serious likelihood that other members of the cabinet will break ranks.

Conservative leader David Cameron denounced the "appalling, shambolic" state of the Government and called for an election.

"In a deep recession and political crisis we need a strong Government. Instead we have a Government falling apart in front of our eyes. Britain deserves better than this,'' he said.

"With this resignation the argument for a general election has gone from being strong and powerful to completely unanswerable.

"For the sake of the country Gordon Brown must take the one final act of authority left open to him, go to the palace today and call the general election we have been demanding."

Brown's allies battled last night to limit the damage, portraying Purnell as misreading the public mood as one of opposition to Brown when it was really disenchantment with the political class.

Brown was given a boost when Caroline Flint, the Europe minister, said she was remaining loyal to Brown, despite her friendship with Blears.

Two senior backbenchers, Barry ­Sheerman, the chairman of the education select committee , and Graham Allen broke cover to demand Brown stand aside. Sheerman called on Brown to allow a secret ballot of Labour MPs on Monday while Allen said Brown "has a decision to make overnight and should take the ­honourable decision to quit." In a sign that something close to a civil war was ­breaking out another Labour backbencher, Geraldine Smith, said she was disgusted by Purnell's "self- indulgent disloyalty" and insisted most Labour MPs were sticking by the prime minister.

But Downing Street will be aware that other ministers will undoubtedly assess their personal positions as the poll results come in over the next three days, and could be emboldened to resist new ­cabinet posts or quit altogether. One former cabinet minister said the test would be whether Labour avoids third place in the polls, adding he would be expressing his views on Sunday night.

Brown's opponents in the party always said the reshuffle would be a crucial test of his authority, and that if he could not assemble a credible government, power would seep away from him.

Purnell's move is also likely to strengthen the secretive backbench revolt which is gathering steam and was reported to have about 75 members. Earlier in the week it is understood that Brown, in a sign of the respect he has for Purnell, offered him the post of children's secretary, the position currently held by Ed Balls.

The fact that he made the offer suggests that the prime minister has been planning to move his close ally, Balls, to the ­Treasury in a controversial move that would see the risky ousting of Alistair Darling.

Darling has been resisting being shifted from the Treasury, saying he had played a difficult hand over the recession as well as could be hoped.

Brown's allies had earlier disclosed that the prime minister would next week be putting forward a policy prospectus as "an alternative to a damaging leadership contest". They had also said his policies would extend New Labour's reforms.

But clearly Purnell, a former culture secretary, had lost confidence in Brown's ability to develop a sufficiently clear domestic policy. He had also become disenchanted with Brown's interest in constructing political dividing lines with the Tories, arguing that such politics alienate the electorate.