Former Met police commissioner Sir Paul StephensonCredit: Max Nash/PA
Stephenson announced he was stepping down following criticism of his decision to employ Neil Wallis, the former executive editor of the News of the World.
Wallis – a personal adviser hired by the Met in 2009 – was arrested last week by officers from Operation Weeting, the police investigation into allegations of phone hacking.
Stephenson, Britain's most senior police officer, said in a statement he was grateful for the "severe discomfort" caused by the allegations, but that his role was not one that could afford distractions.
“Though mine and the Met's current severe discomfort is a consequence of those few that did speak out, I am grateful to them for doing so, giving us the opportunity to right the wrong done to victims – and here I think most of those especially vulnerable people who deserved so much better from us all."
He said the Met could not afford to be distracted ahead of the "enormous" challenge of the Olympics in the coming 12 months.
"I have seen at first hand the distractions for this organisation when the story becomes about the leaders as opposed to what we do as a service. I was always clear that I would never allow that. We the Met cannot afford this – not this year."
Stephenson said he did not know of phone hacking allegations when he met Wallis in 2006, at a meeting between journalists and the Met police.
"I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging; nor of its apparent reach into senior levels."
He added that at the time he did not feel the employment of Wallis to be a "matter of concern".
Unlike Andy Coulson, who was hired as prime minister David Cameron's director of communications following his resignation as editor of the News of the World, Wallis had not resigned from his post at the newspaper, Stephenson said.
Coulson has since resigned from his government communications role and was arrested last week in connection with allegations of corruption and phone hacking.
"I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr Coulson.
"I believe it would have been extraordinarily clumsy of me to have exposed the prime minister, or by association the home secretary, to any accusation, however unfair, as a consequence of them being in possession of operational information in this regard. Similarly, the mayor."
He said he would take ultimate responsibility for the position the Met finds itself in.
"Let me state clearly, I and the people who know me know that my integrity is completely intact. I may wish we had done some things differently, but I will not lose sleep over my personal integrity."
Kit Malthouse, chair of the Metropolitan Police Authority said to be discussing the issue of relations between members of the Metropolitan Police and the press this morning, expressed his disappointment over Stephenson's resignation.
"Sir Paul Stephenson is the outstanding police officer of his generation; dignified, principled and fundamentally decent.
"His resignation is a terrible loss for London and the nation. That he has been driven from office by innuendo at a time when we face great challenges in crime and counter terrorism, should give us all cause to reflect on whether we have this issue in proportion."