Bronwyn Bishop has resigned as Speaker after weeks of criticism over her use of parliamentary travel entitlements.
On Sunday afternoon, prime minister Tony Abbott announced that Bishop had tendered her resignation.
Abbott declined to criticise Bishop, saying "the problem is not any particular individual, the problem is the entitlement system more generally."
Abbott also announced a review into the parliamentary expenses system, saying it needed "fundamental reform".
"This will be a very wide-ranging review. It won't just be tinkering with the system," Abbott said.
In a statement, Bishop said she had resigned because of her "love and respect" for the parliament and the Australian people.
"I look forward to continuing to serve the people of Mackellar as their local member, the job that has always been my first responsibility despite other positions I have held within the parliament" she said.
Bishop first became embroiled in the controversy in mid-July when it was revealed she had spent over $5000 of public money on a charter helicopter flight from Melbourne to Geelong.
Bishop initially refused to apologise for the expense, saying she would pay the money back but that it was within parliamentary expense guidelines.
Over the past few weeks, pressure has grown on Abbott to take action on Bishop.
On Sunday morning, opposition leader Bill Shorten called for Bishop to be removed, saying Abbott's delay was "paralysing" the government and parliament.