Open this photo in gallery Andrew Scheer announces that he is stepping down as Conservative Party leader in the House of Commons on Parliament Hill in Ottawa, on Dec. 12, 2019. BLAIR GABLE/Reuters

Andrew Scheer announced his resignation as Conservative Party leader on Thursday after a disappointing election loss that created internal divisions and revelations he is using party money to pay for his children’s private school tuition.

He will stay on until a replacement is chosen.

Mr. Scheer revealed his decision 24 hours after The Globe and Mail contacted the party and his office seeking confirmation that the Conservative Fund is paying tuition fees for four of his five children to attend private Catholic schools.

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The leader’s office and the party refused comment. Late on Wednesday, sources told The Globe that Mr. Scheer would have to resign once Conservatives became aware the party’s fundraising arm was paying the fees.

The Conservative Fund, which raises money for elections, does pay travel and general expenses of its leaders, but usually not school fees. Former party leader Stephen Harper sent his children to public schools, as does Prime Minister Justin Trudeau.

Sources say members of the board that oversees the Conservative Fund, including Mr. Harper and long-time party fundraiser Irving Gerstein, became aware of the school payments and were investigating when Mr. Scheer announced that he would step down. The fund would not have approved the money, sources said, and added that board members do not view the resignation as coincidental. The Globe is not identifying the sources because they were not authorized to speak publicly about internal party matters.

Dustin van Vugt, the party’s executive director, said neither Mr. Scheer nor the party did anything wrong, saying the payments were “normal practice for political parties ... all proper procedures were followed and signed off on by the appropriate people.”

“Shortly after Mr. Scheer was elected leader, we had a meeting where I made a standard offer to cover costs associated with moving his family from Regina to Ottawa. This includes a differential in schooling costs between Regina and Ottawa,” Mr. van Vugt added.

Mr. Scheer called the Conservative caucus together in the morning for a meeting on Canada’s renegotiated trade agreement with the United States and Mexico, and revealed he was leaving without mentioning the school payments.

He called it one of the most difficult decisions of his life.

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"I just informed my colleagues in the Conservative caucus that I will resign as leader of the Conservative Party of Canada and I will be asking the Conservative Party National Council to organize the process of a leadership election,” Mr. Scheer later told the House of Commons.

“As our party embarks on this exciting opportunity, electing a new leader and Canada’s next prime minister, I intend to stay on as leader of the party and the Official Opposition.”

The party constitution gives the option to the caucus of MPs and senators to decide whether he can remain. However, after an evening meeting, the Tory caucus affirmed that Mr. Scheer would stay on. Caucus chair Tom Kmiec would not say if the issue of the tuition fees was raised, citing caucus confidentiality.

Kory Teneycke, a former top aide to Mr. Harper and campaign manager for Ontario Premier Doug Ford who was pushing for Mr. Scheer to quit, said the leader can’t remain because of the way party funds were used.

“It was improper to use party money in that way. It was hidden and it wasn’t transparent and he should step down now because he knew that was wrong,” Mr. Teneycke said.

Conservative MP Diane Finley defended the reimbursement.

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“There’s a long tradition in all parties of the parties supporting the leader in a variety of ways,” Ms. Finley said.

Senator Jean-Guy Dagenais, who was appointed by Mr. Harper and ran for the Conservatives in 2011, said he was disappointed to learn party funds went to personal expenses, and that Mr. Scheer should refund the money.

“I prefer to take this money to support a candidate in an election,” said Mr. Dagenais, who quit the Conservative caucus in November, citing Mr. Scheer’s leadership.

The Conservative leader had insisted he would not step down even as he faced deep internal divisions over the election campaign, which are expected to be amplified in a review former Conservative cabinet minister John Baird is conducting.

Mr. Baird briefed Conservative MPs from Atlantic Canada and Quebec this week.

He did not give them a rundown of his conclusions, although sources say he acknowledged problems, including Mr. Scheer’s difficulty addressing questions about where he stands on abortion and same-sex marriage, and some campaign communications. Mr. Baird asked the MPs about the campaign, and got an earful, sources said.

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Calgary lawyer Brian Felesky, a long-time Conservative fundraiser in provincial and federal politics, said the party would have had difficulty raising money if Mr. Scheer remained.

“When we checked with the fundraising circles, there was a very expressed anxiety about being there with their cheque books – absence of a change of leadership,” Mr. Felesky said.

Mr. Scheer told the Commons the hectic pace of leading the party – especially during the election campaign – took a toll on his family, calling his wife, Jill, “heroic.”

“In order to chart the course ahead, this party needs a leader who can give 100 per cent to this effort. So after a conversation with my kids, my loved ones, I felt it was time to put my family first,” he said.

Mr. Scheer urged party faithful to “stay united” and focus on winning the next election – something he realized he could not do after he failed to lead his party to victory in October.

Although the Liberals were reduced to a minority and the Tories gained seats, party members expressed deep anger over the campaign.

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Mr. Scheer won the leadership in 2017.

Leaders of the other parties, including Mr. Trudeau, paid tribute to Mr. Scheer and his family in the Commons.

“We are politicians, we are in this House, not in spite of having kids, but because we have kids, and are dedicated to building a better world for them with everything we have. And I respect that deeply of him and thank him,” Mr. Trudeau said.

With reports from Laura Stone and Campbell Clark in Ottawa and Kelly Cyderman in Calgary