Speaking to The Times newspaper after news of the row broke, Mr Laws said: "When I grew up, being gay was not accepted by most people, including many of my friends.
"So I have kept this secret from everyone I know for every day of my life. That has not been easy, and in some ways it is a relief not to have to go on misleading those close to me about who I am."
On Thursday, the newspaper asked him what his family situation was and he replied: "single". Asked whether he had a partner he said: "No".
Last night he said that he wished he had been more open. "I realise that I have made a serious mistake, because of my failure to be honest about my sexuality. Today has been the most difficult day of my life and I apologise to James, and to all my family, friends and constituents who I have not been honest with about who I am over all the years of my life."
He went on: "I hope that others will now learn that it is time for people to be honest about their sexuality. Keeping secrets is much tougher than telling other people who you really are."
Admitting that his actions would seem "very strange for many people today" Mr Laws said that this partner, James Lundie, was the only person he had ever had a relationship with.
"Only one person was aware of who I really am - James. I hope that people will understand that fear of loss of privacy rather than desire for financial gain has been behind the problems I now have."
Labour MP Alan Whitehead, a member of the Commons Standards and Privileges Committee in the last parliament, said Mr Laws' position would be "very difficult" if he was found to have committed "serious breaches" of the rules.
"Clearly if the commissioner decides that serious breaches of the rules have taken place, serious misjudgments have been made about his position, then I think his position will be very difficult," Mr Whitehead told BBC Radio 4's Today programme.
"Certainly on the facts and the way the previous rules operated it is quite clear that David Laws seems to have broken those rules.
"The question I think behind it is the judgment call that he made, and indeed a lot of MPs made judgment calls about the previous rules - some of them disastrously bad.
"That I guess will be the centrepiece of what the commissioner for standards looks at. To decide whether the judgment call that was made by David Laws was indeed one that at least to some extent mitigated what he has done as far as his expenses are concerned."
Mr Whitehead pointed out that the police were able to step in and start an investigation if the matter was considered serious enough.
Foreign minister Jeremy Browne, a friend and Lib Dem colleague of Mr Laws, told Today: "I've known David for about 15 years and I can tell you categorically that this is a human story, it's not a financial story.
"He is a deeply private man and he has a personal wish not to have his life put up in lights.
"I think it should be possible to be in politics and serve your country and still maintain a private life at the same time."
He stressed that Mr Laws had given up a lucrative City career to go into politics, and could have claimed far more in expenses if he had stated openly that he was part of a couple.
The term "partner" in Commons expenses rules was "ill defined" and "not black and white", according to Mr Browne, and the Standards Commissioner would examine that situation.
However, put that Mr Laws and Mr Lundie appeared to have been together since 2001, the MP replied: "I never said it was a casual relationship."
Mr Browne described Mr Laws as "brilliant" and accused the media of damaging the national interest by "prying" into his private life.
"We are in a state of national crisis at the moment," he said. "We have somebody, one of the most talented, brilliant politicians of his generation in the Treasury trying to get our national finances back on their feet.
"If we have a national death wish where we want to pull people down and destroy them personally when they have devoted their life to public service, we are in a state of collective self harm."
He added: "This is a massive distraction, motivated possibly by politics, to tear David down."
Mr Laws had set an "example of frugality" by claiming less in expenses than he was entitled to over the years, the Taunton MP insisted.
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