The Immigration Minister whose department is at the centre of a series of controversies over released foreign prisoners, illegal workers and a "sex-for-visas" investigation has lost his job, it emerged tonight.

Tony McNulty, who kept his role in the May 5 reshuffle despite the demise of his former boss Charles Clarke, has been moved to be minister for policing and security after a mini-reshuffle by John Reid, the new Home Secretary.

Mr McNulty's fellow minister, Liam Byrne, who took over as policing and security minister only two weeks ago, has been moved to take Mr McNulty’s immigration job.

The Home Office's control of immigration came under renewed fire yesterday when it emerged that a senior official had been suspended over allegations that he offered to help a teenage asylum seeker with her application in return for sex.

The Conservatives claimed tonight that Mr McNulty was sacrificed over the "sex-for-visas" scandal, the latest to hit the troubled Immigration and Nationality Department (IND), which is part of the Home Office.

An inquiry is already under way into the employment of illegal immigrants as cleaners at the IND’s Central London offices.

The department is also reeling from the scandal of losing track of hundreds of foreign prisoners who should have been considered for deportation.

The "sex-for visas" allegations centre on the activities of James Dawute, 53, a chief immigration officer at Lunar House, Croydon, South London, who is alleged to have made contact outside office time with the 18-year-old woman, named only as Tanya.

In conversations recorded by The Observer newspaper, the officer is reported to have said that he knew "how to win her case". He is reported as telling the young woman: "I am going to make love to you."

Her allegations are particularly embarrassing because two months ago the Home Office completed an official inquiry into similar claims at Lunar House, an IND office that deals with inquiries from the public, after similar reports in The Sun. It found that there was no systematic sex-for-visas racket.

David Davis, the Shadow Home Secretary, said tonight: "This is clearly an admission of failure on the part of the Government that the original McNulty report into the sex-for-visas scandal was totally inadequate and merely designed to solve a political problem for the Government, rather than a serious one for the immigration service."

The move against Mr McNulty is being seen as part of an attempt by Mr Reid to draw a line under the series of negative headlines to hit the Home Office, which is still trying to track down many of the 1,023 foreign prisoners released without being considered for deportation at the end of their sentences.

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