Number 10 said the Forest of Dean MP offered his resignation after being informed of the embarrassing situation. But it insisted there was “no suggestion” he “knowingly employed an illegal immigrant”.
“The Prime Minister has accepted the resignation of the immigration minister, Mark Harper,” a spokeswoman said.
“Mark Harper offered his resignation after he was informed that his cleaner did not have indefinite leave to remain in the UK, despite having shown him documents claiming she did.
“He immediately notified the Prime Minister, who accepted his resignation with regret. There is no suggestion that Mr Harper knowingly employed an illegal immigrant.”
In his resignation letter, Harper said that while he had not broken the law as an employer, he believed that his position meant he must “hold myself to a higher standard than expected of others”.
He conceded that he “should have checked more thoroughly” that the documents that the cleaner recruited to look after his London flat provided in 2007 were genuine.
At that point he had been given a copy of her passport and a Home Office letter stating that she had indefinite leave to remain in the UK and the right to work and run a business.
Last month – mindful that he was steering the Immigration Bill through the Commons and publicly warning employers over the need to check the status of employees – he sought fresh evidence.
But on Thursday morning, he said, he was informed after checking with immigration officials that she was in fact in the country illegally.
Harper was appointed immigration minster in September 2012.
He has also held the post of minister for political and constitutional reform and shadow minister roles for defence and disabled people.
Before becoming an MP in 2005, Oxford University- educated Harper established his own chartered accountancy business in the Forest of Dean, Gloucestershire.
He will be replaced by James Brokenshire, MP for Old Bexley and Sidcup, who was formerly a parliamentary under-secretary of state at the Home Office.
The Prime Minister said Harper had “taken an honourable decision” and that he hoped to see him return to the front bench “before too long”.