Lord Strathclyde resigns position in the Cabinet

• Peer exposed as having affair in 2012

• Lord Strathclyde says “time right to leave”

• Resignation letter talks of return to private sector employment

• Lord Hill of Oareford named as replacement

Downing Street and friends of the peer have insisted that his decision was taken over the Christmas holidays and is solely because the 52-year-old wants to pursue a second career in business.

But on the day the coalition government is meant to be relaunching itself with a mid term deal, the resignation of a senior and respected member of the government has come as a blow.

Born in Glasgow, the departure of Lord Strathclyde also means that the government has lost another senior Scottish voice in the cabinet following Liam Fox’s forced resignation last year.

The peer informed the Prime Minister of his decision over the new year and the rest of the Cabinet learnt in the Monday morning meeting.

Lord Strathclyde has had a difficult year in 2012 after newspaper revelations exposed that he had been having an affair, but the peer had seemingly weathered the storm and continued in office.

More problems came with trying to get government legisaltion through the Lords where the coalition does not have majority.

One of the most significant defeats was over capping total household benefits to £25,000 after an ammendment put forward by the Church of England bishops was backed by peers. The vote was later overturned in the Commons but it became symbolic of the legislative programme getting bogged down in the Upper House.

Lord Strathclyde also faced potential problems over Lib Dem deputy prime minister Nick Clegg’s plans to replace the Upper House with an elected senate, but the threat of a Tory revolt in the Lords did not materialise after Labour and rebel Tory backbench MPs allied to block the legislation in the Commons.

He received his first job in politics 25 years ago when Margaret Thatcher made him a whip.

For the last 14 years he has led the Tories in the Lords and last three as Leader of the House of Lords.

He was also a trade minister and in an unbroken 25-year front bench career he has served under six different Conservative leaders.

In his resignation letter to David Cameron, Strathclyde said the time was right to leave, having recently clocked up 15 years as leader of the Tories in the Lords, and 25 years on the party’s front bench, having previously served as a whip, chief whip and minister.

“The Lords is an extraordinary and vigorous place, but recently I’ve been thinking of a change of direction,” Strathclyde wrote to the prime minister.

“I started my life in the private sector and at some stage always hoped to return, I would now like to do so.”

Downing Street announced that Lord Hill of Oareford will replace Strathclyde as Leader of the Lords and Chancellor of the Duchy of Lancaster in the cabinet.

Last year Lord Hill, a former political secretary to prime minister John Major, hit the headlines when it was claimed that he failed to resign as a junior education minister in the reshuffle in September when Mr Cameron apparently failed to notice Hill was trying to quit.

Lord Strathclyde was appointed a Companion of Honour, and praised by Mr Cameron for his “assured handling” of Lords business, which included tricky times over the now shelved reform of the House of Lords and rebellions among coaltiion peers on issues including secret courts and NHS reform.

“To me personally, you have always been a staunch friend and wise counsel,” Mr Cameron said. “You will be much missed.”