British Defence Secretary Liam Fox resigned on Friday amid a spiralling scandal over his links to the best man at his wedding, becoming the first Conservative minister to quit the coalition government.

Fox, who played a key role in Britain's military campaigns in Libya and Afghanistan, stepped down after it emerged that his friend Adam Werritty posed as a government adviser and took a string of foreign jaunts with the minister.

"I mistakenly allowed the distinction between my personal interest and my government activities to become blurred. The consequences of this have become clearer in recent days," Fox wrote to Prime Minister David Cameron.

"I am very sorry for this."

Cameron said Fox, 50, had helped prevent Libyans being 'massacred' by Muammar Gaddafi's forces and had done a 'superb job' since the Conservative-Liberal Democrat coalition came to power after elections in May 2010.

He said he would be announcing Fox's replacement "very shortly".

With rumours swirling in the press about the nature of Fox's relationship with his 34-year-old former flatmate, Fox told parliament earlier this week that Werritty had accompanied him on 18 foreign trips since he became minister.

Werritty also visited Fox 22 times at the defence ministry in London during the same period and printed business cards describing himself as Fox's adviser despite having no official government role.

But the killer blow came on Friday with reports that financial backers linked to Israel and a private security firm had funded Werritty's first class travel and hotel stays during his time with the minister.

Werritty was interviewed for a second time on Friday by civil servants as part of an inquiry ordered by Cameron last week, a government source told AFP. The results of the inquiry are expected next week, the source added.

Fox said in his letter to Cameron that he had "repeatedly said that the national interest must always come before personal interest. I now have to hold myself to my own standard".

"I have therefore decided, with great sadness, to resign from my post as secretary of state for defence -- a position which I have been immensely proud and honoured to have held," he said.

Cameron thanked Fox -- Britain's sixth defence minister in ten years -- for overseeing "fundamental changes" at the bloated Ministry of Defence and in modernising the armed forces as part of wider government cost-cutting.

"I understand your reasons for deciding to resign as defence secretary, although I am very sorry to see you go," the premier wrote to him.

"On Libya, you played a key role in the campaign to stop people being massacred by the Gaddafi regime and instead win their freedom."

But the main opposition Labour party said there were still questions to be answered about Fox's conduct. "Governments have got to have rules and ministers have got to have standards and he fell foul of the standards we expect," Labour defence spokesman Kevan Jones said.

Fox, who rose from humble beginnings on a Scottish social housing estate to become a medical doctor before joining politics, was one of the Conservative party's last heirs of hardline former prime minister Margaret Thatcher.