BBC director general George Entwistle has resigned over the "unacceptable" Newsnight broadcast which wrongly implicated a senior former Conservative in a child abuse scandal.
In a brief statement outside Broadcasting House, last night Mr Entwistle said that he had decided to do the "honourable thing" and step down from his post.
Standing alongside him, the chairman of the BBC Trust, Lord Patten said it was "one of the saddest evenings of my public life".
A clearly emotional Lord Patten, who chose Mr Entwistle for the role, said that he had paid the price for the "unacceptable shoddy journalism" on Newsnight.
Seconds before Entwistle stepped outside to face the cameras and resign as director general, he sent an email to BBC staff explaining his action.
In the message, the ex-editor-in-chief, wrote that the public's confidence in the corporation was damaged but stressed the BBC was still full of staff of integrity and talent.
Reacting to the news, Culture Secretary Maria Miller said: "It is regrettable, but the right decision. It is vital that credibility and public trust in this important national institution is restored."
Mr Entwistle, who had been in post for less than two months, has spent virtually the entire time trying to deal with the fallout from the Jimmy Savile child abuse scandal.
The final nail in his coffin was the disclosure that Newsnight - which had been panned for not running a report exposing scandal - had wrongly implicated a former Tory Party treasurer, in a child abuse scandal in north Wales in the 1970s and 1980s.
In a bruising interview yesterday morning with Radio 4 presenter John Humphrys Mr Entwistle admitted that despite all the furore over the scandal, he had been unaware that Newsnight was going to broadcast the North Wales report.
An incredulous Mr Humphrys demanded: "So there is no natural curiosity, you wait for somebody to come along to you and say, 'Excuse me director general, but this is happening and you may be interested'?
"You don't look for yourself, you don't do what everybody else in the country does, read newspapers, listen to everything that's going on and say 'What's happening here?"'
The disclosure that he had not known about the Newsnight report was greeted with disbelief by MPs.
The chairman of the Commons Culture, Media and Sport Committee John Whittingdale said last night his position had become untenable.
Mr Entwistle has been under fire since the disclosure that in his previous job as head of BBC television he had run tribute programmes on Jimmy Savile even though he was aware that Newsnight was investigating the late DJ.
He came under pressure to explain why he had not sought any information about what the allegations were that the programme was looking into.
After the allegations broke last month in an ITV documentary he was criticised for delays in setting up an inquiry and correcting mistakes in the BBC's account of what happened.
The chief executive of BBC Worldwide, Tim Davie, will take over temporarily as acting director general while a permanent replacement is found.
One of the first issues he will have to deal with is a emergency report commissioned by Mr Entwistle into what happened over Newsnight's north Wales investigation which had been due to land on his desk today.
There was some support for Mr Entwistle. Labour former culture secretary Ben Bradshaw described his departure as "a dreadful injustice and a terrible mistake".
Newsnight presenter Jeremy Paxman, in a statement released via his agent's Twitter page, said his departure was "a great shame", saying he had been "brought low by cowards and incompetents".
Mr Entwistle's position was dramatically undermined on Friday night when child abuse victim Steve Messham, who was interviewed by Newsnight, said an ex-Tory party figure was not the man who he told Newsnight had abused him when he was a teenager at a north Wales children's home.
Although the programme, shown on November 2, had not named the peer - referring only to a senior Conservative from the Thatcher era - it quickly resulted in him being identified on internet blogs and social media sites.
With lawyers for the ex-Tory party figure indicating they were preparing to sue for defamation, the programme broadcast a humiliating on-air apology.
Entwistle leaves Portcullis House in Westminster, London, after being quizzed about the corporation's handling of the Jimmy Savile sex abuse scandal by a committee of MPs.
Appearing yesterday morning on Today, Mr Entwistle warned that staff involved could face disciplinary action but insisted that he was not intending to resign.
He acknowledged however that his fate lay ultimately in the hands of his employers, the BBC Trust.
"I am doing the right things to try and put this stuff straight," he said. "I am accountable to the trust in that endeavour. If they do not feel I am doing the right things, then obviously I will be bound by their judgment."
It appears today that the judgment was that that task was beyond him.