Kelly move a setback for Brown

The surprise announcement threatened to take some of the shine off the Prime Minister's well-received speech to Labour's conference in Manchester and pre-empted a long-awaited Cabinet reshuffle which is now expected to take place at the end of next week.

But Mr Brown said he understood Ms Kelly's decision to quit in the upcoming reshuffle, which he insisted was "nothing to do with politics".

Labour ministers believe the PM's speech with its promise of free NHS prescriptions for cancer sufferers, coupled with the relative absence of open rebellion at the five-day gathering, have given the party fresh momentum which they hope will be reflected in the polls and the crucial Glenrothes by-election expected on November 6.

The final day also saw the announcement of plans for free school meals for all primary pupils, to be trialled in two areas of England from September next year, as well as the naming of the first three struggling schools to merge with more successful neighbours under Schools Secretary Ed Balls' National Challenge programme.

Ms Kelly herself insisted her departure was not an indication of unhappiness with the direction in which Mr Brown was taking the party but was "purely a decision that has been taken for family reasons".

Describing herself as a strong supporter of the Labour Government, she said she believed Mr Brown was the right man to lead the party and the country.

"I can't think of anyone better than Gordon Brown - a towering figure in the Labour Party - to be going abroad and arguing on the world stage for the sort of reforms we need to make our own economy stronger but also to put in place the framework we need at the moment to create stability among the financial turmoil," she said.

Mr Brown revealed that she had told him of her intention to step down in May, adding: "It is a very personal story and I do understand as a father myself that there are difficult decisions we have to take."

Asked about speculation that there were more ministerial resignations in the offing, Mr Brown responded: "That's not true at all."