He was the undisputed star of the Scottish Labour Party – tipped as a future First Minister, perhaps even a potential incumbent at 10 Downing Street itself. But for Steven Purcell, Glasgow's youngest and first openly gay council leader, the fall from grace was to be as spectacular as it was rapid.

Even in a city where the art of politics is practised with a notoriously brutal tenacity, few can recall a career which imploded quite so dramatically as that of the 37-year-old. His demise has been charted in a daily barrage of lurid headlines that have painstakingly detailed everything from allegations of cocaine abuse to drug barons and blackmail threats; from inevitable suggestions of homophobia to a friend's tragic sudden death and even an unlikely cameo appearance in the plot by Lady Gaga.

Yet while the city's wine bars and pubs are alive with speculation this weekend over exactly what befell Mr Purcell to make him quit as the head of the council with responsibility for 30,000 employees, a post he was elected to in 2005, he has maintained a resolute silence that has only added fuel to criticisms that the increasingly bizarre affair has damaged the party as it prepares for the general election.

What is known, however, is that in an evening telephone call 12 days ago, Mr Purcell contacted council officials to tell them he was resigning his position immediately.

The following day his lawyer, one of the most powerful litigation specialists in Scotland, issued a statement explaining that his client was recovering from exhaustion and was having professional help after apparently being overcome by the pressures of work. He pleaded for him to be left alone and given time to recover.

Those within the claustrophobic world of Glasgow's intertwined political, business and media elites were baffled. Only four days earlier Mr Purcell had been entertaining Gordon and Sarah Brown and a host of celebrities at a charity function in the Hilton's grand ballroom. Some at the lavish fundraising event recalled him bantering and joking. He apparently showed no signs of stress as well-heeled political backers ate and drank, while refilling the party coffers with a fundraising auction which included a painting by the artist Peter Howson and a Manchester United shirt signed by Sir Alex Ferguson. Others claimed he was already showing signs of strain, suggesting he left early and was in an uncharacteristically subdued mood when he was dropped at his home in the fashionable West End shortly after midnight.

The following day, however, it was clear something was badly wrong. According to one friend something had "spooked" him. Though he initially appeared relaxed on reporting for work at Glasgow City Hall, by the afternoon the man once tipped for the highest office was disintegrating in front of astonished colleagues. One source described the change in character as a "complete metamorphosis". By the evening it was claimed he was talking gibberish, shouting and complaining of plots being hatched against him.

By now Mr Purcell had begun to express concerns over his own state of mind, apparently in the throes of a fully fledged nervous breakdown. That weekend he checked himself into Castle Craig, one of Europe's leading rehab clinics, which boasts a team of experts specialising in the treatment of drink and drug addiction. But the troubles continued. It was reported that the following night the council leader had gone missing in the open facility, which is set in 50 secluded acres of rolling landscape of the Scottish Borders. He later returned soaking wet, prompting speculation he may have tried to drown himself in a river.

On Wednesday, Mr Purcell's media adviser Jack Irvine, a former editor of The Sun in Scotland, issued another statement confirming that his client had now left the facility, where it was said he had not been treated for substance abuse. But the story was causing serious difficulties for Labour, which has exerted an iron grip over Clydeside politics for generations. At the end of the week Mr Purcell announced he had withdrawn from public life and was resigning his seat – effectively killing off his political career.

In a tragic coincidence one of the political leader's friends, an 18-year-old council employee called Danus McKinlay, dropped dead in the street outside the city chambers.

Despite pleas and threats to lay off the story, the torrent of claims continued. The most damaging to emerge was that Mr Purcell had admitted to friends that he had taken cocaine, though he had since turned his back on drugs. It also emerged that his lifestyle had come to the attention of detectives investigating one of Scotland's biggest cocaine barons. Officers from the Scottish Crime and Drugs Enforcement Agency held a meeting the previous May with Mr Purcell because of fears he was vulnerable to blackmail, after a dealer claimed to have incriminating mobile phone footage of him.

Political opponents are demanding that Labour put the record straight, and the party's acting leader, Jim Coleman, is under mounting pressure to make a full statement explaining exactly what happened. The SNP's Glasgow East MP, John Mason, has led the attack: "The whole thing stinks. We need answers. In relation to the visit of senior police officers to Mr Purcell, we need to know who are the people suggested as having applied pressure to him in terms of possible blackmail threats. And crucially, has this had any impact on public policy in the city of Glasgow?

"Given the massive budgets managed by the council, there is a clear case for Audit Scotland carrying out a thorough investigation. The people of Glasgow, and Scotland as a whole, deserve to know the full facts."

Mr Purcell was reported to be abroad this weekend, possibly in Australia. Meanwhile, every aspect of his recent past is being scrutinised. Journalists have monitored messages of support posted on his Facebook site by some of his more than 1,000 friends. It was also reported that he had spent last New Year's Eve at Miami's luxurious five-star Fontainebleau hotel, watching a poolside concert by Lady Gaga from the balcony of his suite.

But those close to the one-time high-flyer are coming to terms with the unexpected loss of one of the party's most exciting prospects in decades. Mr Purcell was considered a powerful moderniser, well liked by Tony Blair and Mr Brown, who helped to bring the Commonwealth Games to the city he loved, and who stood firm during a spate of recent damaging battles, clashing bruisingly with the First Minister, Alex Salmond, over the scrapping of a proposed rail link to Glasgow airport.

Supporters claim his decision to come out in 2006 after the breakdown of his five-year marriage to Katrina Murray, a trades union activist, made him unpopular with the macho wing of the party. Some observers have detected "old-fashioned homophobia".