Mr Yeo's future as a minister was cast into doubt after he confirmed a Sunday newspaper report that he had had an affair with Julia Stent, a Conservative councillor, who gave birth to their daughter, Claudia-Marie, last July.
While Shadow Cabinet ministers avoided attacking Mr Yeo's private life, the disclosure will undermine the credibility of the Government's efforts to tackle the problem of lone parent families, by extolling the virtues of the traditional family. Mr Yeo once told his local branch of Relate, the marriage guidance organisation: 'It is in everyone's interest to reduce broken families and the number of single parents. I have seen from my constituency the consequences of marital breakdown.'
Mr Major, who has a record of supporting ministers under pressure, is not expected to demand Mr Yeo's resignation, but it is likely to be a matter of time only before he is replaced as an environment minister.
Mr Yeo, director of the Spastics Society before entering Parliament in 1983 as MP for Suffolk South, is regarded as a likeable 'wet' on the 'caring' wing of the Conservative Party. The Mellor affair raised questions about standards of public life, but served to underline the fact that, unlike President Clinton, leading British politicians find it almost impossible to survive sex scandals. The disclosure about Mr Yeo will embarrass Mr Major's efforts to give priority to reasserting family values. Lord Parkinson, who resigned as a Cabinet minister over his affair with Sara Keays, has found it impossible to escape continuing publicity over his illegitimate daughter.
Mr Yeo, 48, married with two grown-up children, met Miss Stent, 34, at an annual Conservative Party conference. She is a solicitor specialising in housing problems. After being elected to Hackney council in May 1992, she met leading politicians, and was photographed with the Prime Minister.
Mr Yeo was Parliamentary aide to Douglas Hurd as Home Secretary and Foreign Secretary, until he was promoted in 1990 as a housing minister. He was moved by Mr Major in 1992 to the Department of Health, to oversee the introduction of the large-scale reforms to care in the community for the mentally ill. Mr Major promoted Mr Yeo to Minister of State and moved him back to the Department of Environment under John Gummer in charge of waterways and environmental protection.
The Sunday newspapers had been aware of the Yeo disclosures for some weeks, and ministers would have been briefed to expect a Christmas scandal.
Mr Yeo said in a statement issued by his solicitors: 'Julia Stent and I have had, over some time, a close relationship which developed into an affair. We remain close friends and I have accepted responsibility for our child.
'My wife and family are aware of the extent of our relationship.'
He went on: 'Julia had herself decided not to identify publicly the father of her child and strongly resents that, in order to put an end to speculation in some quarters of the media, she now finds it necessary to do so.
'I regard my relationship with Julia Stent as an entirely private matter which has no bearing upon our respective political duties. In the light, however, of the continuing intrusion of certain representatives of the press, I have notified my government colleagues of the situation.'