Holyrood was left stunned last night when it emerged that Nicol Stephen, the leader of the Scottish Liberal Democrats and a former Deputy First Minister, has decided to stand down for family reasons.

The resignation of Mr Stephen, 48, comes after that of Wendy Alexander, who quit as leader of Labour in the Scottish Parliament last Saturday.

Mr Stephen said in a statement last night: “Everyone involved in politics knows that there are stresses and strains on family life. But when it goes beyond that, when it crosses a line, something has to be done. And at that stage — when you have to make a choice between family and politics — there can only be one answer. The health and wellbeing of your family has got to come first.

“With four children between the ages of 4 and 12, my family has got to be my priority.”

Mr Stephen took over three years ago from Jim Wallace and although his party is now in opposition in the Parliament in Edinburgh, his decision to go comes as a big surprise.

The Lib Dem Scottish executive will meet at the weekend to put in place a timetable for the election of a replacement and a source said last night that it was hoped he or she would be in place by the time that Parliament resumes after the summer recess in September.

Until that replacement is elected, Michael Moore, the present deputy leader, one of the party's Scottish MPs at Westminster will lead the party in Scotland.

The hot favourite to take over from Mr Stephen at Holyrood will be Tavish Scott, at present the party's finance spokesman and also a former minister — if he wants the job.

The resignation of Mr Stephen is even more surprising given the relatively good year he has had at Holyrood since going into opposition after the Scottish elections last year.

His performances at First Minister's Questions have been widely viewed as consistently impressive and he has been able to get under the skin of Alex Salmond, the Nationalist First Minister, with relative ease.

A former MP for Kincardine and West Aberdeenshire, Mr Stephen led his party in a ruling coalition with Labour at Holyrood for the first two years of his leadership but refused to enter a coalition with the Nationalists when they won power last year.

The stumbling block was the Lib Dems' refusal to countenance a referendum on independence, a key SNP demand, and although he came in for much external criticism for that decision he maintained that it would have been the height of hypocrisy for his party to enter any such deal when they had campaigned against a referendum during the election.

His resignation does come at a difficult time for the Lib Dems, who will find a leadership contest a distraction.

With only 16 MSPs out of 129, the party has tended to be sidelined in recent months over policy although its support for the SNP aim for a local income tax could be crucial.

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