Sir John Bourn, Westminster's watchdog on government spending, is to resign, it was announced yesterday.

The news comes just days after his own £365,000 expenses bill was made public and shortly before he is due to be grilled by MPs.

Comptroller and Auditor General at the National Audit Office (NAO) since 1988, the 73-year-old, who has inspected billions of pounds of government expenditure across Whitehall, will go in January.

He said it had been a "privilege" to head up the NAO but explained he was stepping down because changes in the law meant his Auditor General's job would clash with his role regulating auditors. He did not mention the row over his own expenses bill.

In June, the Public Accounts Commission cleared him of any wrongdoing after it was revealed he had spent £336,000 on 45 trips in three years. The commission noted Sir John had travelled "first class for rail travel, business class for short-haul flights and first class for long-haul flights".

While it found "no evidence of impropriety", it did call for a "more transparent system" in processing the Auditor General's expenses. On Monday, Sir John is due to appear before the Commons Public Accounts Committee (PAC).

The LibDems branded his travel bills of £16,500 spent on trips between April and September, paid for by taxpayers, as "absolutely shocking". Details released also showed Sir John had dined in some of London's most illustrious restaurants. Between April and September, he spent £1650 on 11 business meals. His "gigantic bills for largesse" were condemned as "incredible" by Norman Baker, the Lib Dems' Cabinet Office spokesman.

Most controversially, entertaining by defence contractors included a visit to the British Grand Prix, paid for by BAE Systems, under investigation over a Tanzanian defence order. Sir John refused to release an official document on BAE's biggest and most contentious order, the Al Yamamah defence deal with Saudi Arabia.

Sir John will be succeeded by Tim Burr, his deputy, but only once the NAO is reformed. Intriguingly, Sir John is - in theory - the only unsackable postholder in Whitehall. He was appointed for life by Margaret Thatcher, then Prime Minister, and Robert Sheldon, then Labour PAC chairman. To preserve the postholder's independence he or she can be removed only by a vote of the Commons and Lords.