It follows revelations she used taxpayer-funded trips to buy property and attend New Year’s Eve functions.

Prime Minister Malcolm Turnbull announced her resignation this afternoon in his first press conference since the politicians’ expenses scandal broke last week.

He announced a new independent agency to manage parliamentarians’ work expenses.

“Australians are entitled to expect that politicians spend taxpayers’ money carefully, ensuring at all times that their work expenditure represents an efficient, effective and ethical use of public resources,” he said in Sydney.

“As politicians, backbenchers and ministers, we should be as careful and as accountable with taxpayers’ money as we possibly can be.

“We are dealing with other people’s money.”

The independent parliamentary expenses authority will monitor and adjudicate all claims by MPs, senators and ministers to ensure taxpayer funds are properly spent, Turnbull said.

It will be governed by an independent board and will include a person experienced in auditing, the president of the remuneration tribunal, a former judicial officer and a former MP.

Parliamentarians’ expenses will be made available monthly and in a searchable format, he said.

“We owe the people of Australia the greatest transparency and the greatest accountability,” he said.

“Having this information available regularly – monthly, as I said – that will ensure, I believe, a great change in transparency and accountability.”

Turnbull said he would make further announcements about ministerial arrangements next week.

The government will also continue to implement the recommendations of a report handed down in 2016 following the Bronwyn Bishop expenses scandal, he said.

Turnbull said there had been extensive discussions, and Ley had reached the decision to tender her resignation.

“She has made a judgment that is, I believe, in the interests of the government,” he said.

He declined to comment further on the findings of his department’s investigation into her taxpayer-funded travel.

The prime minister said part of the problem is that the work of politicians is unique.

But ultimately MPs had to make personal judgments about whether expenses are incurred for the purposes of doing the job as an elected representative.

“I hate the term entitlements … these are work expenses,” Turnbull said.

“What we need to do is ensure that the Australian people are satisfied, beyond any shadow of doubt, that parliamentarians are spending their expenses appropriately.”

Turnbull defended the government’s slow action on the issue, blaming the disruption of the July federal election.

He reached out to MPs from other parties to take ownership of the reform.

In a statement this afternoon Ley said she was confident she had followed the rules – “not just regarding entitlements but most importantly the ministerial code of conduct”.

She said she was continuing to co-operate with a Finance Department review into her travel claims and would not object to the material she’s provided being made public.

“Whilst I have attempted at all times to be meticulous with rules and standards, I accept community annoyance, even anger, with politicians’ entitlements demands a response,” she said.

“The team is always more important than the individual and I look forward to serving both the Liberal Party and the government well into the future.”

– AAP