Baroness Buscombe, chairman of the Press Complaints Commission, will step down from her role following growing criticism of the watchdog in the wake of the phone hacking scandal, she said today.
The peer took over her role in April 2009 but has faced a backlash over the handling of the saga which brought about the closure of the News of the World.
Her exit from the embattled watchdog makes her the latest of a string of high-profile departures claimed in recent weeks as the storm surrounding News International gathered pace.
Baroness Buscombe will relinquish her post once a successor has been found, the watchdog said.
She will not continue beyond her three-year term of office which comes to an end in the New Year.
Announcing her decision, she stressed the need for the embattled PCC to continue its work rather than introducing "statutory intervention".
And she outlined a wish to contribute to Lord Justice Leveson's judicial inquiry into phone hacking and "participate fully in the overall debate regarding reform, unfettered by my role as chairman of the PCC".
Baroness Buscombe, 57, a barrister by training, has come under increasing pressure since she took on the role.
Announcing her plan to step down, Baroness Buscombe said: "I am very proud of my work at the PCC, which - from the very beginning - has been aimed at instigating the process of reform of the organisation.
"This included a governance review in the course of which I decided to make a number of internal improvements and the introduction of revised procedures in regard to the editors' code. This was always intended to be a springboard for further reform.
"I am pleased that the Commission want me to continue in post until my successor has been appointed. Thereafter, I will be able to be a campaigner for change from outside the organisation.
"I wish to contribute to the Leveson inquiry and participate fully in the overall debate regarding reform, unfettered by my role as chairman of the PCC."
Baroness Buscombe will contribute to the Leveson inquiry as an expert in the area of media regulation.
Today she appeared to support calls for a tougher approach to press misconduct.
Outlining "three clear messages", she said: "First, the public rightly demands stronger powers for dealing with the misconduct of the press. They must get them.
"Second, the public needs the existing work of the PCC to continue and be built upon.
"I have worked as chairman to ensure that we give real help (both before and after publication) to members of the public, who otherwise would have no one to turn to. The staff of the PCC are unsurpassed in terms of the effort and intelligence they bring to their work.
"And third, the importance of a free press has never been greater.
"It was thanks to investigative journalism that the phone hacking scandal was brought to public attention. Newspapers and magazines must have the proper freedom to represent their readers' interests, and also to expose wrongdoing wherever it may be found.
"In this world of shifting media provision, I am convinced the answer to ethical concerns about the press is not statutory intervention. What is needed is a greater sense of accountability among editors and proprietors. A PCC with increased powers and reach remains the best way of achieving that."
Earlier this month David Cameron appeared to call time on the current system of press regulation, accusing the PCC of being "ineffective and lacking in rigour" and citing the need for a "new system entirely".
Labour leader Ed Miliband branded the independent, self-regulatory body a "toothless poodle".
Mr Whittingdale added: "Obviously we want to see the responses that they send to the letters that we are writing, but Tom Crone and Colin Myler and Jon Chapman have all said that they dispute the evidence given to this committee by James Murdoch.
"We want to hear exactly how they dispute that. I suspect it very likely that we will want to hear oral evidence. If they do come back with statements that are quite plainly different from those given by James Murdoch, we will want to hear James Murdoch's response to that.
"The chances are that this may well involve oral evidence from him as well."
He said it would have made no difference whether the Murdochs or Brooks had given evidence to the committee on oath. The select committee was looking into whether it had been misled but was not concerned with an entire investigation into phone-hacking, he added.
Earlier, a friend of the mother of the murdered schoolgirl Sarah Payne said she was "absolutely devastated" after being told she may have been targeted by a private investigator who hacked phones on behalf of the News of the World.
Sara Payne, who worked closely with the Sunday paper to campaign for tougher child protection laws, previously said she had not been told she was a victim of phone hacking.
But her friend Shy Keenan revealed that Scotland Yard this week told her that her contact details were found in notes compiled by private detective Glenn Mulcaire, who was jailed over phone hacking in January 2007.
Former News of the World editor Ms Brooks, who became close friends with Ms Payne during the paper's campaign, said the latest allegations were "abhorrent".
It is believed that the evidence found in Mulcaire's files relates to a phone given to Ms Payne by the News of the World so she could contact her supporters, the Guardian reported.
Ms Brooks said in a statement: "For the benefit of the campaign for Sarah's Law, the News of the World have provided Sara with a mobile telephone for the last 11 years. It was not a personal gift.
"The idea that anyone on the newspaper knew that Sara or the campaign team were targeted by Mr Mulcaire is unthinkable. The idea of her being targeted is beyond my comprehension."
A source close to News of the World staff said it was understood that Ms Payne's phone did not have voicemail until 18 months ago.
Ms Payne wrote a column for the final issue of the News of the World on July 10 after it was closed amid growing political and commercial pressure over the phone hacking scandal.
Describing the paper as "an old friend", she said it became a driving force behind her campaign for a "Sarah's law" to give parents the right to find out if people with access to their children are sex offenders.
News International, which owns the tabloid, which was forced to close in the wake of the scandal, said it was taking the matter very seriously, was deeply concerned and would cooperate fully with any potential criminal inquiries.
The latest revelation, which comes following allegations the paper illegally accessed the voicemails of murdered schoolgirl Milly Dowler, 7/7 victims' relatives and grieving military families, will ratchet up the pressure on the publishing company and its embattled head James Murdoch.
Mr Murdoch has faced growing scrutiny about his governance in the wake of the scandal, but yesterday reports suggested he been unanimously backed by the board of BSkyB to remain in his role as chairman.
The broadcaster, which is partly-owned by News Corp, News International's parent company, is expected to formally announce its show of support today following lengthy discussions between directors yesterday.
The board meeting was the first since News Corp abandoned a takeover bid for BSkyB because of the hacking furore.
The PCC said Baroness Buscombe would leave the watchdog in a "better position to continue its evolution".
"We are grateful to Peta for making this announcement today, which will help to ensure that her successor is in a position to assist and support the inquiry of LJ Leveson," it said in a statement.
"We are grateful that she will stay on as chairman in the interim, as the PCC not only continues to serve the public in handling complaints, but begins the process of formulating improvements to the system of press regulation.
"Peta has made a major contribution to the PCC, and her work has led to many improvements over the last couple of years.
"She leaves the commission structurally stronger than when she came in and in a better position to continue its evolution.
"We thank her for all that she has achieved thus far as our chairman, and wish her all the very best for her future once she has handed over to her successor."
The Media Standards Trust said her decision was "the right one".
"There has clearly been a failure of leadership at a time when the PCC needed firm direction," the charity said.
"Not only did the outgoing chair preside over a wholly inadequate investigation into phone hacking at the News of the World (which the PCC finally withdrew on July 6 2011), but she criticised The Guardian for its investigation and had to pay damages following a libel action by the lawyer, Mark Lewis."
It said the PCC's "fundamental problems" were structural, citing a "lack of independence from the industry, the opacity of its funding arrangements, and its lack of adequate formal powers".
She is expected to hand over to a replacement after a candidate has been approved.
On Twitter, former deputy prime minister John Prescott, wrote: "I'm glad Buscombe is going but she shouldn't be replaced with another puppet of the papers. We need major reform & a truly independent PCC."
During her tenure, she has been forced to defend the PCC amid calls for a body with more independence from newspapers and tougher investigative powers.
In an open letter to accompany the PCC's annual review last year, she wrote: "the undesirability of a statutory press regulator is very clear."
The announcement of her departure follows the resignations of former News of the World editor Rebekah Brooks, two of Britain's most senior police officers and Les Hinton, one of Rupert Murdoch's most trusted lieutenants.
The PCC was set up in 1991, enforcing a code of practice by which UK newspaper and magazine publishers and editors promised to abide.
Lord Black of Brentwood, chairman of the Press Standards Board of Finance which funds the PCC, said: "Baroness Buscombe has given the PCC independent and strong leadership during the most turbulent and challenging time in its history.
"She has initiated a series of reviews and reforms which will strengthen the PCC and the services which it provides to the public.
"I understand her decision to announce today her wish not to continue as PCC chairman beyond her term of office.
"We thank her for her huge contribution in leading the PCC forward during the past two years and wish her well for the future."
The Press Standards Board of Finance, whose board comprises senior newspaper and magazine industry executives, is responsible for the appointment of a new chairman.