Her resignation came after Prime Minister Helen Clark accepted the accuracy of a New Zealand Press Association report which quoted Dalziel as saying "no" when she was asked whether she knew how a lawyer's letter had been disclosed to the media.

"Given that NZPA stands by its report and that clearly such a reply would have been untrue. I have discussed the matter further with Lianne Dalziel," Clark said.

"In her words she has 'come to the conclusion that I face ongoing speculation that can only be damaging to me and more importantly the government' and on that basis has offered her resignation."

The minister this week told NZPA that she did not know how the leaked letter reached a television station.

The young Sri Lankan fled to New Zealand with her grandmother in 2002, telling authorities she had been sexually abused by relatives and feared for her life if she were returned to Sri Lanka.

However, she was twice refused refugee status and was deported last Thursday.