Canada's embattled immigration minister, who once called herself the "minister of hopes and dreams", resigned last night amid allegations that she promised an Indian pizza restaurant owner asylum if he would provide food for her campaign workers.

Canada's embattled immigration minister, who once called herself the "minister of hopes and dreams", resigned last night amid allegations that she promised an Indian pizza restaurant owner asylum if he would provide food for her campaign workers.

Judy Sgro denied the claims, calling them "ridiculously false", but said she had quit her cabinet post to mount a vigorous defence of the allegations.

Ms Sgro's ministry already was facing allegations that a Romanian stripper was fast-tracked for Canadian immigration after she and family members volunteered to work on Ms Sgro's campaign.

She is the first cabinet minister to resign since the minority administration of the Prime Minister, Paul Martin, came to power seven months ago, promising open government.

The opposition has seized on the scandal, using it to attack Mr Martin's leadership as weak and ethically challenged.

Ms Sgro last night insisted that she had never spoken to the restaurant owner, Harjit Singh. She said: "Let there be no doubt that I will be fighting these allegations vigorously with every measure at my disposal."

Ms Sgro, 60, insisted the comments by Mr Singh in a federal affidavit were lies made in an attempt to prevent his deportation. Mr Singh, a father-of-three who came to Canada in 1988, was due to be deported next week on charges of forgery and perjury. He said Ms Sgro approached him during her campaign last spring and asked him to supply her campaign workers with pizza.

In the affidavit, Mr Singh claimed that when word of their arrangement leaked out, Ms Sgro had him arrested and ordered his deportation to "save her job".

Mr Martin said he accepted her resignation "with regret". He added: "She wants to have a completely free hand to defend herself against these allegations. I think that she was a very strong minister and I think that she brought a great contribution to citizenship and immigration and I look forward to her continuing public career."

The leader of the Conservatives, Stephen Harper, launched an attack on Mr Martin. He said: "This was obvious to everybody months ago, that this minister had to go, and I'm surprised that the Prime Minister couldn't provide leadership and it finally took her own resignation to get the change."

Last month Ms Sgro's department was accused of fast-tracking the immigration application of a Romanian exotic dancer. Those allegations are being investigated by the federal ethics commissioner and had prompted the opposition leaders to demand Ms Sgro's resignation.

For years, the Canadian government has run programmes to import workers for industries that cannot find enough Canadians to fill their jobs. And they have included the exotic dancer industry. In 2003, Canada gave automatic visas to more than 19,000 construction workers from foreign countries, as well as almost 5,000 nannies and 1,560 university professors.

It also welcomed 661 women to work in the strip clubs in cities across the country. Of those, more than 80 per cent were from Romania.