"I am very sorry for this."
Fox's close friend and former flatmate Adam Werritty, 34, became the subject of a government inquiry after it emerged that Werritty went on 18 trips abroad with the 50-year-old minister despite having no official role.
Cameron said he was sorry to see Fox go and praised him for his role in the British military campaigns in Afghanistan and in Libya, where he said he had helped to stop people being massacred by Moamer Kadhafi's forces.
The inquiry's findings were not due until next week, but Fox could not survive a flurry of reports on Friday that financial backers linked to Israel and a private security firm funded Werritty's first class travel and hotel stays during his time with the minister.
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Fox said in his letter to Cameron that he h