Fine Gael strategist Frank Flannery has resigned as a board member of the Rehab Group and is quitting all of his roles with the Fine Gael party.
He is stepping down as Fine Gael Director of Elections for the Local Elections and as a trustee of the party.
Mr Flannery said his involvement with the Rehab board was making the group the subject of political controversy.
He said his involvement with Fine Gael related only to electoral strategy and organisation and he had no role in advising the Government.
Mr Flannery said that Fine Gael and the Taoiseach would continue to have his complete support and he would assist the party in any way as a private citizen.
Taoiseach Enda Kenny has said he noted the resignation of Mr Flannery from his posts in Rehab and Fine Gael.
Speaking in Manchester where he opened an Irish heritage centre, Mr Kenny said Mr Flannery had been associated with the development of Fine Gael since the days of the late Garret FitzGerald.
He said given his work with the party and with Rehab today's developments were not the way you expected things to be.
He described Mr Flannery's decision as a strong one that he respected.
Mr Flannery's resignation follows weeks of controversy over his role at Rehab and calls by members of the PAC for him to appear before the committee.
PAC members called for him to discuss his pension as former Rehab chief executive and payments he received from the disabilities group for lobbying the Government.
Mr Kenny, Tánaiste Eamon Gilmore, along with other ministers and Opposition leaders, had all called on Mr Flannery to appear before the PAC.
Mr Flannery said that he had informed the chairman of the Rehab Group board that he was stepping down as a director of the group and any other group boards with immediate effect.
Mr Flannery has been deeply involved with Fine Gael for several decades and up to his resignation today was Director of Organisation and Strategy, which is an unpaid post.
In a statement tonight, Rehab said: "Mr Flannery has been a member of the Rehab Group Board since 2011, bringing to bear his vast experience and knowledge of the many diverse activities of the Group.
"Mr Flannery was an employee of the Rehab Group for 33 years, leading it as chief executive for over 25 years until 2006, and overseeing its growth and establishment as a leading provider of a training, education, health and social care and employment services to many thousands of people with disabilities and other marginalised people.
"The board of the Rehab Group would like to sincerely thank Mr Flannery for his service as a board member and wish him well for the future."
It emerged recently that he was paid consultancy fees out of a UK division of Rehab for lobbying the Government over the Charity Lotteries scheme and other work.
Rehab appeared before the PAC over a week ago for a seven-hour hearing, but details of all of the salaries of senior staff were not provided.
The committee wrote to Rehab seeking details by this Thursday on salary levels for all senior staff, any bonus payments to its Chief Executive Angela Kerins, and the extent of consultancy work conducted by Mr Flannery, along with details of his pension benefits.
PAC members have also raised questions about the shareholding that was held by Sean Kerins, Mrs Kerins's husband, in a business linked to Rehab, which imported wood for coffins in 2010 from China, in which her brother, Joseph, and Mr Flannery are listed as current directors.
PAC members call for Flannery to appear at committee
The Chairman of the PAC has said Mr Flannery is expected to give evidence to the committee in the coming weeks.
John McGuinness said nothing had changed following Mr Flannery's resignation from the board of Rehab and from his role in Fine Gael.
Mr McGuinness said questions must still be answered and the committee could compel Mr Flannery to appear if he refuses to do so voluntarily.
Sinn Féin deputy leader and PAC member Mary Lou McDonald also said Mr Flannery should still appear before the committee.
She said: "The one thing missing from Frank Flannery's statement this evening is the looming question of whether or not he will appear before the Public Accounts Committee.
"He must come before the committee and address the issues of public concern that currently surround him."
Earlier, Minister for Education Ruairi Quinn said Mr Flannery had brought up issues of concern about the charity with him while he was a serving minister.
Speaking on RTÉ's Today programme, Mr Quinn said: "He had spoken to me on different occasions about concerns they had over changes in monies that were available to Rehab as a result of the introduction of the National Lottery but not in any kind of lobbying way."
Fianna Fáil's Sean Fleming said while the PAC welcomes Mr Flannery's resignation there are still questions to be answered.
The Fianna Fáil spokesperson on public expenditure said there has to be confidence in the charity sector.
"This is one of the most important things in public life. Just because someone resigns they should stay around to answer questions in respect of the period of when they were directors of various organisations and it will be damaging to the charity sector because Rehab is in the charity sector and the public have to have confidence in the charity sector and the resignation doesn't inspire confidence."