Barclays chief executive Bob Diamond has resigned with immediate effect.

The move comes less than a week after the bank was fined for trying to manipulate inter-bank lending rates, sparking a government inquiry and calls for criminal investigations.

Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise".

Barclays chairman Marcus Agius, who had announced his own resignation on Monday, will now take over the running of Barclays until a new chief executive is appointed.

The bank refused to comment on reports that chief operating officer Jerry del Missier, one of the executives to give up his bonus after Barclays received a record fine for Libor manipulation last week, was also planning to step down.

Mr Diamond will still appear before MPs on the Treasury Committee on Wednesday to answer questions about the Libor affair.