Dublin North TD Clare Daly has resigned from the Socialist Party following a row over her political connection to Independent TD Mick Wallace.
Ms Daly handed in her resignation letter yesterday and said she will "redesignate" herself as a United Left Alliance TD.
She had been criticised by some in the party for her support for Mr Wallace after it emerged that his company had made a false VAT declaration to the Revenue Commissioners.
Ms Daly said: "I believe it is time to prioritise the building of the ULA.
"Unfortunately the potential of the ULA has not been fully realised and it is now time that the component organisations prioritised the building of the ULA."
She said that she hoped to remain on good terms with members of the party and did not want to engage in a "public war of words".
Party leader Joe Higgins said it was not acceptable for a Socialist Party TD to endorse a "tax-evading developer".
Mr Higgins said it was damaging to the campaign against the Household Charge.
Socialist Party MEP Paul Murphy described Ms Daly's resignation as a blow to the party.
The party said that Ms Daly’s political connection to Mr Wallace had potentially damaged the reputation of the party.
Mr Wallace described the party’s statement as "too laughable to merit a reaction".
Elsewhere, the Campaign Against Household and Water Taxes has reaffirmed a motion that Mr Wallace should not act as a spokesperson for the campaign and no-one from the campaign should support him.