In her resignation letter to the Prime Minister, Lady Chalker said she was "deeply committed to continuing development work in Africa and now feel that I should do this independently".
She continued: "This is in no way a sudden decision but confirms my long- held wish which we discussed last year."
In his reply, John Major said he respected her wish "but with great regret".
Praising her contribution to the Government since 1979 as "enormous across a range of departments", the Prime Minister said Lady Chalker had brought a "particularly effective combination of dedication, hard-headed analysis and a genuine compassion".
Lady Chalker became the Conservative MP for Wallasey in 1974. She was appointed Minister of State at the Foreign and Commonwealth Office in January 1986.
In June of the following year, she was made a Privy Counsellor and became Minister for Overseas Development in July 1989 with responsibilities for overseas development administration, sub-Saharan Africa and Commonwealth affairs.
She lost her seat at the last election to Labour's Angela Eagle, but a life peerage allowed her to continue her overseas development work.
In December, she announced pounds 20m of aid for Ethiopia and a further pounds 10m to the Palestinians in January.
Speaking to the CBI earlier this year, Lady Chalker announced an initiative to enable the private sector and the ODA to work more closely. She has also argued for the need for the European Union to consider the impact that all its policies have on its work with developing countries.
Her Labour shadow, Clare Short, said yesterday that Lady Chalker had done a good job while getting little support from her government over the main overseas development issues.Reuse content