The health secretary, Alan Milburn, resigned from the government today.

His departure will be seen as a blow to Tony Blair's plans to modernise the welfare state; despite the opposition of the chancellor, Mr Milburn had championed the controversial policy of establishing semi-autonomous foundation hospitals.

Echoing the famous phrase of the Norman Fowler, who left Margaret Thatcher's government to "spend more time with his family", Mr Milburn, who has two young sons, is understood to have told the prime minister that he found it increasingly difficult to be a cabinet minister as well as having a family in the north-east.

Mr Milburn's resignation will allow a greater reshaping of the cabinet than initially expected. The lord chancellor, Lord Irvine, is also expected to retire, but other high-profile departures were not foreseen. The trade and industry secretary, Patricia Hewitt, had, however, been suggested as a possible replacement for Mr Milburn at the department of health.

Mr Blair's official spokesman said this morning: "I can confirm that there will be a reshuffle later today but we would advise you that the detail will not become apparent until later this afternoon, with one exception."

"On Monday, the health secretary, Alan Milburn, told the prime minister that he wanted to leave the government," he added. "Today's reshuffle gives him the opportunity to do that."

The spokesman added: "The reasons Mr Milburn gives are contained in his letter and there is no other reason why he has decided to leave the government."

In his resignation letter to Mr Blair, Mr Milburn said: "I have found it increasingly difficult to balance having a young family in the north-east with the demands of being a cabinet minister." "I know this is something you understand and I am grateful for all the support you have shown in respect of my decision."

"It has been an enormous privilege to serve in government for six years. But I have already missed a good bit of my children growing up, and I don't want to miss anymore. It has come down to a choice between my career in politics and my life with my family."

Mr Milburn stressed in his letter: "It is not a political decision for I support you totally in what you are trying to do. It is entirely personal."

Despite the blow his departure will be seen to inflict on his modernising agenda, Mr Milburn was also bullish about the reforms he has introduced, claiming that "the NHS is now moving forwards".

"The money is going in and the reforms that you and I have argued for are making an impact."

In his reply Mr Blair said: "I was obviously very sorry to hear that you wanted to leave the government, though I understand the reasons and respect your decision. I know how much your family means to you, and this is clearly a decision you have taken together."

Mr Milburn had been spoken of as a possible successor of Mr Blair. Close friends with the former trade and industry secretary, Stephen Byers, who also resigned from the government, the two men were once compared to the young Mr Blair and Gordon Brown.

A source close to Mr Milburn told the press association that he had no immediate plans. "He will be an MP. That's the top and tail of it," he said.

Later, Mr Milburn told reporters at Richmond House, Whitehall, that he wanted to put his family first and see his young children grow up.

He said: "Well, I have mulled it over a lot lately.

"I concluded that I cannot do this 24 hour a day, seven days a week job in a busy cabinet post and have anything like a normal family life."

Mr Milburn went on: "For me it was a personal choice and a straightforward one between a career in politics and a life with my family.

"For most people, that choice is a pretty straightforward one."

Reacting to the suggestion that political commentators would be looking for ulterior motives behind Mr Milburn's decision, the MP replied: "I understand that and they are wrong. I understand that there will be motives suggested about this.

"There will be implications and there will be the wildest of conspiracy theories about this."

Mr Milburn added: "But it comes down to a simple thing - a personal choice."

Discussing his future, Mr Milburn said: "You get one shot in life with kids. You get one chance to see them grow up. I have not been there and I want to be there."

Describing the kind of life politicians lead, Mr Milburn added: "I think it's a crazy way of life and a mad way of life. People have different ways of dealing with it - but this was an intensely personal choice."