Per Sandberg, 58, has weathered weeks of attacks, from the media, opposition politicians and even from within his own party, after he visited Iran in July with his new Iranian girlfriend Bahareh Letnes, who is 30 years younger than him.
He alerted neither his own ministry nor the Prime Minister's office before the trip, and he brought his official mobile phone with him, breaking security protocols.
The story has become a major crisis for the coalition government, owing partly to suspicions over Letnes' relationship with the Iranian government.
“I'm incredibly proud. The last two years have been the most rewarding throughout my career. It is both humbling and sad,” Sandberg said at a press conference alongside Prime Minister Erna Solberg, according to state broadcaster NRK.
He is likely to be replaced as Progress deputy leader by Norway's immigration minister Sylvi Listhaug, and will be replaced as fisheries minister by Progress Party veteran Harald Tom Nesvik.
Sandberg said that he planned to meet the Norwegian press on Tuesday alongside Letnes to defend her and himself against rumours of regime links.
It has emerged that Letnes sent an email to the Fisheries Ministry in 2016 asking if she could work for Sandberg. Norway's PST security services have confirmed that they are now examining Letnes' background.
In a text sent to the Addressa newspaper, the Norwegian-Iranian woman wrote that the news story had been “a pure witchhunt."
“I have been demolished in a democratic country,” she wrote in another text to NRK. “How can we now stand as an example to dictatorial countries. Are we no better than them?”
Solberg said that Sandberg's “long experience in the Storting [parliament]” had been “of major importance for the negotiations over the government platform.”
She also confirmed a story earlier in the day that Sandberg had also broken safety guidelines on another trip to China in spring.
Sandberg has long been a controversial figure in the Progress Party, known for his harsh criticism of Islam and Roma immigrants in Norway, and also for his unruly personal behaviour.
In 2014, the Verdens Gång newspaper reported that Sandberg had had to be pulled off another senior party members after attacking him at a party congress. He resigned as deputy leader in 2013 amid rumours he would start another, rival party.
Since his divorce in May and the start of his relationship with Letnes, Sandberg has become surprisingly close to Iran, taking part in an event at the Iranian Embassy celebrating the aniversary of the coujntry's Islamic Revolution.