Defence Minister Joel Fitzgibbon has resigned from his portfolio.

The resignation comes after revelations of Mr Fitzgibbon's involvement in instructing an army general to attend meetings with his brother at which defence health contracting was discussed.

Maj-Gen. Paul Alexander, who is in charge of defence health services, told a parliamentary committee that staff of a junior minister and defence staff told him to attend the meetings attended by Mark Fitzgibbon, the chief executive of insurer NIB Health.

Maj-Gen. Alexander said he was at a meeting with officials of US health insurer Humana on August 27 last year.

Mark Fitzgibbon was at the meeting and appeared to "sponsor" Humana officials,Maj-Gen. Alexander said.

In a letter to Prime Minister Kevin Rudd, Mr Fitzgibbon said to protect the integrity of the government, he had decided to resign as defence minister effective immediately.

Mr Fitzgibbon is the first ministerial casualty for the Rudd government.

It follows admissions two months ago that he failed to declare trips to China paid for by Chinese-born businesswoman Helen Liu.

This week he admitted he had failed to declare hotel accommodation paid for by NIB.

The opposition had called for him to go.

In his letter, Mr Fitzgibbon said his resignation followed questioning in a Senate estimates hearing on Wednesday night regarding meetings between US health group Humana, his brother Mark who is chief executive of health fund NIB, Veterans Affairs Minister Alan Griffin and Defence Personnel Minister Warren Snowdon.

"I decided to thoroughly examine the nature of any contact between Humana, my brother and my office," he said.

"Having done so and despite having made clear to all parties that it was important that I not be involved, I am not satisfied that contact between the various parties leave it clear that I have entirely conformed with your ministerial code of conduct."

Mr Fitzgibbon said he had learned that one meeting between the parties was held in his ministerial office and that his staff members sat in on a number of meetings.

"Again despite my decision to avoid being part of discussions between the parties, I am not absolutely satisfied that that objective has been achieved to the extent necessary to ensure full compliance with your ministerial code of conduct," he said.

"On that basis and to protect the integrity of the government, I have decided to resign as a member of the executive effective immediately."

Prime Minister Kevin Rudd paid tribute to Mr Fitzgibbon, saying he had discharged his function as minister in a first-class way.

Mr Rudd said Mr Fitzgibbon had offered his resignation and that he had accepted it.

The prime minister said he expected high standards of accountability from every minister.

"I've made clear to my ministers over a long period of time the government expects high standards of accountability on the part of it ministers," Mr Rudd told reporters.

"All my ministers are familiar with that and it's on that basis the minister has extended his resignation."

Mr Fitzgibbon's failure to declare a hotel room in Brisbane was a minor breach, Mr Rudd said.

"I was unhappy about it but we let that matter rest."

The matter over which he resigned is "different".

"It goes to the question of the undertakings that the minister made publicly in March this year, and concerning the relationship between himself and his office and this particular company, Humana, and NIB which of course is headed by his brother."

Mr Rudd acknowledged Mr Fitzgibbon had made mistakes in regards to matters of accountability.

"And he's paid a high price," he said. "The minister has accepted responsibility for these mistakes, they are mistakes in relation to accountability, there have been a number of them.

"This one does represent a significant departure from the undertakings the minister gave publicly on this particular matter."

Mr Rudd stressed the government was not contractually involved with any of the players in this latest episode.

"On the substance of any contractual agreement between either NIB, the company Humana or the Australian government, there has none, there is none," he said.

Mr Rudd said Mr Fitzgibbon had earlier said he was not involved in the handling of the NIB matter.

"What he has informed us of today is that his staff did attend meetings with NIB on this matter and furthermore, that one of those meetings occurred within his office," the prime minister said.

The prime minister suggested there wouldn't be a broader reshuffle of cabinet when Mr Fitzgibbon's replacement was announced.

"I think it's important to take things step by step," he said.

"It's important to get on with the business of government. I've never been in the business of saying change for changes sake."

Mr Rudd said human beings have weaknesses and the ability to make mistakes.

"Therefore, obviously I feel sad about this but it is important that we maintain high standards of ministerial accountability."

Mr Rudd told parliament no members of his staff had attended two meetings that became the catalyst for Mr Fitzgibbon's resignation.

"I've just been advised by my office that no members of the prime minister's office attended any such meeting," Mr Rudd said.

CANBERRA AAP