Emma Harrison, millionaire boss of a welfare-to-work firm has quit as the Prime Minister's "Family Champion" after allegations of fraud.
Emma Harrison said she did not want the police investigation probe, which has seen four ex-members of A4e staff arrested, to distract from the Government's efforts to help vulnerable families.
"I have asked to step aside from my voluntary role as Family Champion as I do not want the current media environment to distract from the very important work with troubled families," she said in a statement.
"I remain passionate about helping troubled families and I am grateful for the opportunity to contribute in an area where I have been active for many years."
David Cameron handed Harrison the unpaid role of getting families back into work in December 2010.
Two police investigations are under way after irregularities were referred by the firm to the Department for Work and Pensions.
A4e said yesterday that two cases of nine referred to the DWP remained outstanding.
One, being handled by Thames Valley Police, involves four former members of staff and a second, also being investigated by police, involves a subcontractor.
Shadow work and pensions secretary Liam Byrne said: "Emma Harrison has done the right thing. But this is not the end - it's the start of the real questions about the Government's back to work contracts which are costing millions but are simply not getting enough people into jobs."
Mrs Hodge has led criticism of A4e over large payouts to Ms Harrison and other bosses despite what she said was an "abysmal" performance record.
Its five shareholders were paid £11 million in dividends last year, of which Ms Harrison received 87%, her committee was told this month.
She said that was excessive given that all the firm's £160-£180 million UK turnover last year came from Government contracts.
She questioned the granting of contracts to A4e under the new Work Programme in light of what she said was an "abysmal" delivery of the previous Pathways to Work scheme.
Government ministers have insisted that the type of fraud being investigated could no longer happen under new welfare programmes.
Mr Cameron announced Ms Harrison's appointment in a December 2010 speech in which he praised her "proven track record of turning lives around".
"Her approach is the complete opposite of the impersonal, one-size-fits-all approach that has failed so many families - which is why I have asked her to come on board to help us," he said.
He said she would lead on the use of funding to help 500 troubled families across the country.
In September last year, Mr Cameron visited A4e's offices in Brixton, south London, where he met Work Programme participants and advisers.
The DWP decided there was no "malpractice" involved in the other cases, according to the company.
Cameron has called for a "thorough" investigation of the cases. "It needs to get to the truth and then we can take into account its findings," he told MPs.
Earlier this month, Harrison warned highly-vulnerable households risked being harmed by the Government's "populist" benefit cap.