Britain's most senior police officer sensationally resigned tonight over revelations surrounding the phone hacking scandal.

Scotland Yard Commissioner Sir Paul Stephenson cited allegations surrounding his association with former News of the World deputy editor Neil Wallis for his shock announcement.

The bombshell came hours after former editor Rebekah Brooks was arrested on suspicion of phone hacking and corruption.

Sir Paul said: "I have taken this decision as a consequence of the ongoing speculation and accusations relating to the Met's links with News International at a senior level and in particular in relation to Mr Neil Wallis who as you know was arrested in connection with Operation Weeting last week."

Sir Paul insisted his integrity was intact despite pressure on him intensifying this weekend after it emerged he accepted thousands of pounds' worth of free accommodation at a luxury health spa.

The commissioner had already been under fire for hiring Mr Wallis as a PR consultant before the former tabloid executive was arrested for mobile phone interceptions.

But issuing his statement at Scotland Yard, he said: "Let me state clearly, I and the people who know me know that my integrity is completely intact.

"I may wish we had done some things differently, but I will not lose sleep over my personal integrity."

Boris Johnson, the Mayor of London, said: "It is with great sadness and reluctance that I have tonight accepted the resignation of Sir Paul Stephenson as Commissioner of the Metropolitan Police Service.

"I would like to stress that I have absolutely no reason to doubt the complete integrity of Sir Paul and I believe him to be a fine, passionate and committed public servant who has done a huge amount of good for our city.

"Sir Paul believes, however, that the phone hacking saga now threatens to become a serious distraction during the run up to the Olympic Games.

"He has persuaded me that someone else should now be allowed to take his work forward so that the focus can return to policing and bringing down crime.

"I should like to pay personal tribute to his outstanding leadership at the Metropolitan Police.

"He has helped to bring crime down by 9% in three years. He has put more officers on the beat, protected safer neighbourhood teams and increased patrols by a million a year on the streets of London.

"It is a mark of his work and determination that crime on public transport has fallen by 30% and that the murder rate is now at its lowest since 1978.

"If there has been any wrongdoing by members of the Metropolitan Police it is vital that this should now be exposed and cleared up in the inquiries under way.

"But it is my strong belief that Sir Paul and the overwhelming majority of police officers have dedicated their careers to the public good and for that we owe him and them our thanks."

The resignation came as the recently departed News International chief executive Ms Brooks was still being quizzed at a London police station after her "surprise" arrest.

The 43-year-old was held on suspicion of phone hacking and corruption after keeping an appointment at an unnamed London police station.

Sir Paul said he had told Buckingham Palace, Home Secretary Theresa May and London Mayor Boris Johnson about his decision.

Announcing his departure he said he wanted "to put the record straight" over his relationship with Mr Wallis.

He said that when he met Mr Wallis in 2006 he had no knowledge of the original investigation into News of the World hacking that was taking place at the time.

"I have heard suggestions that we must have suspected the alleged involvement of Mr Wallis in phone hacking," he said.

"Let me say unequivocally that I did not and had no reason to have done so.

"I do not occupy a position in the world of journalism; I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging; nor of its apparent reach into senior levels."

Home Secretary Theresa May is to make a statement to the Commons tomorrow about the relationship between the Metropolitan Police and Chamy Media, Mr Wallis's PR firm

Sir Paul said he saw no need to inform senior ministers of Scotland Yard's contract with Mr Wallis, who worked two days a month for Scotland Yard during 2009 and last year, earning £24,000.

Explaining the decision to recruit Mr Wallis for PR services, Sir Paul said: "The contracting of Mr Wallis only became of relevance when his name became linked with the new investigation into phone hacking.

"I recognise that the interests of transparency might have made earlier disclosure of this information desirable.

"However my priority, despite the embarrassment it might cause, has been to maintain the integrity of Operation Weeting. To make it public would have immediately tainted him and potentially compromised any future Operation Weeting action."

Referring to the "reported displeasure" of the Prime Minister and the Home Secretary, he added: "The reasons for not having told them are two fold.

"Firstly, I repeat my earlier comments of having at the time no reason for considering the contractual relationship to be a matter of concern."

He went on to say there was "no impropriety" in relation to his use of Champneys luxury spa facilities.

"There has been no impropriety and I am extremely happy with what I did and the reasons for it - to do everything possible to return to running the Met full time, significantly ahead of medical, family and friends' advice.

"The attempt to represent this in a negative way is both cynical and disappointing."

Mark Lewis, solicitor for the family of Milly Dowler, told Sky News today was a "significant day".

"These are very important times, the public are standing up to the three Ps - press, politics and the police."

When asked if the recent developments meant things were getting out of hand, he said: "It is not in danger of getting out of hand, it was out of hand, it was those unhealthy relationships that existed with the News of the World.

Referring to Mr Wallis, he said: "We almost had a job swap, where someone went from the News of the World to the police.

"[Sir Paul Stephenson] of course might have taken no part in that role but he was the Commissioner of the Metropolitan Police. He ought to have been aware of what was going on.