A government statement announced that Ngozi OkonjoIweala had stepped down because of "a compelling need to take care of pressing family issues".

Okonjo-Iweala, a former World Bank vice-president, was in London negotiating a new debt-relief package when she heard the news of President Olusegun Obasanjo's decision to demote her.

She left London without comment on Thursday, to return home to a statement of regret from the president that she had decided "to leave at this stage of our reform programme" which he said was beginning to yield "positive results".

Speaking on Nigerian television, she thanked the president, who had been "gracious enough to allow me to leave", so that she could take care of her family, who have remained in Washington.

But the resignation of such a prominent African reformist is likely to be greeted with dismay by western donor countries which had placed great faith in her capacity to deliver.

During her time as finance minister, Okonjo-Iweala persuaded western donors that Nigeria was not an oil-rich nation and should qualify for debt relief.