Anne Turville, 41, had found a copy of Escort magazine in the desk drawer of Keith Don-oghue, town clerk of Wells, Somerset, while he was away from the office.
She lodged an official complaint and the 16 councillors in England's smallest city held a private meeting to discuss the future of Mr Donoghue, who is also a cathedral chorister. They voted 9-7 to allow him to keep the job that he has held for two years.
But following the decision Mrs Turville, of Evercreech, near Shepton Mallet, handed in her resignation.
She said: "I was disgusted by what I found. I am no prude, and by all means, people can read these magazines at home, but they should not be brought into the office."
The Mayor of Wells, Nick Denison, said: "I received a complaint from a member of staff concerning another member of staff and I fully investigated the matter.
"I sought the advice of my colleagues and I took appropriate action, which they fully endorsed, and the matter is resolved."
Mr Donoghue would only say: "I very much regret the matter."Reuse content