The British Prime Minister, Mr Tony Blair told the House of Commons this afternoon that he had regretfully accepted Mr Mandelson's resignation.
"I would like to pay the warmest possible tribute to him for the tireless efforts he has made in securing peace in Northern Ireland," he said.
He added Mr Mandelson had shown "personal courage and a sense of duty" in taking Northern Ireland questions today.
Mr Blair said he accepted that comments made to a newspaper by Mr Mandelson's office had been "misleading" and had led to the Commons being misled.