Alberto Costa, who was born in Scotland to Italian parents, had put down an amendment for a vote on Wednesday night requiring the government to seek a separate agreement to guarantee their rights, even if there was a no-deal Brexit.

A spokesman for the Prime Minister said Mr Costa had observed the convention that members of the government do not put down amendments to government business.

The spokesman added that the government would not oppose the amendment, although it is not clear whether Tory MPs will be whipped to abstain or whether they will be allowed to vote for it.

The resignation of Mr Mundell’s Parliamentary Private Secretary comes amid confusion this morning over whether the government had accepted Mr Costa’s amendment, which attracted cross-party support from over 140 MPs.

Giving evidence to a Commons committee on Wednesday, the Home Secretary appeared to endorse Mr Costa’s proposal.

However, in her statement to parliament on Tuesday, Theresa May highlighted the legal challenge it posed, telling MPs: “A separate agreement for citizens’ rights is something the EU have been clear they do not have the legal authority for.”

A Whitehall source described Mr Costa’s departure as “a loss”, adding that “he was a big asset for the Scotland Office”.

Mr Costa’s parents, who live in Glasgow, have never sought British nationality. He was made a Knight of the Star of Italy by the Italian government in 2017 for his work on behalf of EU citizens.

Senior aide to David Mundell quits over the government’s handling of Brexit