Frank Flannery has resigned as a director of the Rehab charity, as well as from positions within the Fine Gael party.

Tonight, the chairman of the Public Accounts Committee, John McGuinness said he still expected him to "co-operate fully" with the parliamentary watchdog and to give evidence in the coming weeks.

In a statement this evening, Mr Flannery said his decision to step down from Rehab and its associated companies applied with immediate effect.

"I have informed the Chairman of the Rehab Group board, Mr Brian Kerr, that I wish to step down as a director of the Rehab Group and any other group boards with immediate effect," Mr Flannery said.

“It is a step that I undertake with real regret but I have come to the opinion that my involvement with the board is making the Rehab Group the subject of political controversy at this time.

"I have also informed the General Secretary of Fine Gael, Tom Curran that I am stepping down as director of elections and as a Trustee of the party as of today.

“My involvement with Fine Gael related only to electoral strategy and organization and I had no role in advising the Government.”

Mr Flannery said he believes “the Government and Fine Gael in particular, is performing well and the economy is on the mend”.

“The party and the Taoiseach will continue to have my complete support and I will assist the party in any way I can as a private citizen and as a proud ordinary member of Fine Gael.”

A former CEO of Rehab, he added: “I spent 34 years in the Rehab Group and retired in December 2006. I rejoined the board in 2011. The Rehab Group has played an enormously valuable role in Irish Society for nearly 70 years and I wish it continued success for the future.

Speaking this evening, Mr McGuinness said: “The position of the Committee in respect of Mr Flannery has not changed and, like the former board members at the Central Remedial Clinic, I expect that Mr Flannery will want to appear before the Committee to clarify issues in relation to the Rehab Group.”

Mr Flannery’s role as Fine Gael’s director of organisation was a voluntary and unpaid position which involved Mr Flannery “mentoring and identifying potential candidates”, the party said.

The party’s spokesman said he understood this had been the case since Fine Gael took office in 2011. He did not know what the situation was before that.

“Frank is not on the payroll and he hasn’t submitted invoices to the party,” the spokesman said.

Mr Flannery’s statement does not mention whether he will appear as requested before the Public Accounts Committee.

Mr Flannery came under pressure this morning after Minister for Education Ruairi Quinn confirmed he was approached informally by Mr Flannery over issues of State funding which were of concern to the charity.

Mr Quinn says he never had formal meetings with Mr Flannery about Rehab issues, but would see him around Leinster House and Government Buildings before weekly Cabinet meetings.

The Irish Times reported at the weekend that Mr Flannery was paid thousands by Rehab to lobby the Government, with the Departments of Education, Social Protection and Justice targeted.

Mr Quinn was asked about his contact with Mr Flannery on RTE Radio this morning, and said he would usually see him in the company of Fine Gael advisors.

“There is a corridor that ministers have offices on which is at the back of Government Buildings linked to Leinster House proper,” Mr Quinn said.

“I would be in there at, say, 8.30am in the morning on the day of a Cabinet meeting and I would meet him or I would see him walking past the odd time with usually Fine Gael advisors and I would have greeted him.

Mr Quinn's Labour Party colleague Minister of State Kathleen Lynch said this morning Mr Flannery's position had become untenable.

Ms Lynch was the first Minister to come out and say Mr Flannery’s role as a lobbyist for the Rehab Group, which paid him to influence Government, and his role as an advisor to Fine Gael, was unsustainable.

She said legislation on the issue would be brought forward by Minister for Public Expenditure and Reform Brendan Howlin in the "not in the distant future".

Minister for Finance Michael Noonan said this afternoon that

“certain allegations [WERE]being made but I think the process should be that he is invited before the public accounts committee and he should attend and then we’ll see what comes out of that”.

Speaking from Brussels today on his way into a eurogroup meeting of euro zone finance ministers Mr Noonan said: “I don’t like the Alice in Wonderland idea that let’s have the verdict first and the trial after. Let him go in and answer whatever points are put to him”. .

Speaking in Manchester, Taoiseach Enda Kenny said he had not spoken to Mr

Flannery today. He said: “I don’t want to personalise this but Frank Flannery has been around since the time of the late Garret FitzGerald and had been always been an important part of the development of Fine Gael in all its phases over the years.

“I know of the comment and statement he’s issued now and I do hope that he’s made his decision here, which is clear, and which is strong, I think. “Obviously, I would understand that if he were to get an invitation from the Public Accounts Committee that he should cooperate with that committee as everybody else should as well.

“I think, in the interest of the charities, which are so important to Irish people all over the world, that it’s very fundamental that there be transparency, accountability, and access and cooperation.”

Sinn Féin TD Mary Lou McDonald who is a member of the Public Accounts Committee said it could compel Mr Flannery to appear before it “if necessary”.

She said he is not currently compelled to attend.

She Mr Flannery had received a number of invitations from the committee inviting him t attend and it was known that both the Taoiseach and the Tánaiste wished him to do so.

Ms McDonald said the committee is “anxious” to discuss his business dealings.

Rehab is preparing to provide a "full and frank" response this week to 12 detailed questions submitted to it by the PAC after a seven-hour hearing two weeks ago with its chief executive Angela Kerins.

The expectation last night was that the response would go tomorrow to the committee, whose next regular meeting is on Thursday.

However, the disclosure in The Irish Times on Saturday that he was paid by Rehab to lobby the Government intensified political pressure on Mr Flannery.