"In order to avoid embarrassment to the Government and maintain peace and harmony in Parliament, my leader (DMK chief M Karunanidhi) has advised me to resign," Raja said.
Raja, 57, met Karunanidhi in Chennai twice in the last 24 hours, before flying back to Delhi and went straight to the Prime Minister's 7, Race Course Road residence to hand over his resignation letter.
Raja is the second minister in the UPA-II government to have resigned following a controversy.
Minister of state for external affairs Shashi Tharoor had quit a few months back in the wake of the IPL-Kochi team ownership controversy.
Raja's resignation was the third one in recent days on the issue of corruption, with Ashok Chavan quitting as Maharashtra chief minister following the Adarsh Housing society scam.
Also, Congress leader Suresh Kalmadi quit as the parliamentary party secretary following the CWG mess.
Kalmadi was the chairman of the Organising Committee for the Commonwealth Games held in New Delhi last month.
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