Speaker Bronwyn Bishop's resignation has sparked a fresh review of politicians' perks.
Mrs Bishop caved in to mounting public pressure over her travel expenses on Sunday afternoon and tendered her resignation to Governor-General Peter Cosgrove, heading off what could have been an embarrassing return to parliament for the government on Monday week.
"I have not taken this decision lightly," Mrs Bishop said in a statement.
"It is because of my love and respect for the institution of parliament and the Australian people that I have resigned as Speaker."
The scandal began on July 15 when it was revealed the Speaker spent over $5200 to charter a luxury helicopter for an 80km trip from Melbourne to a golf club where she spoke at a Liberal party fundraiser.
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Mrs Bishop said on Sunday she looked forward to continuing to serve voters in her NSW electorate of Mackellar.
Announcing her resignation from the Speaker's post, Prime Minister Tony Abbott said it was not the day to offer an appreciation of his friend's long political career and contribution to public life.
"This has obviously been a very difficult day for Bronwyn Bishop," Mr Abbott said.
He announced former Finance Department head David Tune and Remuneration Tribunal boss John Conde will undertake a fundamental review of MP travel entitlements.
"It won't just be tinkering with the system," he told reporters in Sydney.
Mr Abbott said the public deserved to be absolutely confident taxpayers' money was not being abused.
"Plainly the system that we have is deficient," he said.
Some recent travel entitlement claims had been within the rules but were out of line with community expectations, Mr Abbott said.
The review will be given to the government in the first half of 2016.
Opposition Leader Bill Shorten said Mrs Bishop's resignation was overdue.
"Mr Abbott has blamed the system, but it was Mrs Bishop's addiction to privilege that was the real culprit," Mr Shorten said in a statement.
He said the announcement of the review should not absolve Mr Abbott of publicly releasing the Finance Department's investigation into Mrs Bishop's alleged misuse of entitlements.
Independent MP Andrew Wilkie, who had vowed to bring about a no confidence motion in the Speaker along with Clive Palmer, said the federal police should investigate whether Mrs Bishop has committed any criminal fraud.
He was relieved by her resignation.
"Thank God for that. Watching this saga unfold was worse than getting your wisdom teeth out," he said in a statement.
He wants the review to stamp out the practice of MPs "tripping around Australia for all sorts of private reasons".
Possible replacements as Speaker include Liberal MPs Sharman Stone and Jane Prentice, although Deputy Speaker Bruce Scott - who is retiring at the next election - could also fill the chair.
