Minister for Labour and Employment Kumar Belbase resigned after he was accused of bribery, Minister for Information and Communication Raj Kishore Yadav who is also the government spokesperson said.
Prime Minister Baburam Bhattarai earlier in the day had sought the resignation of Belbase.
"Now the ministerial portfolio of Labour ministry has been handed over to Minister for Culture, Tourism and Civil Aviation Post Bahadur Bogati," Himalayan Times said.
Belbase was caught on video tape demanding bribe from manpower companies and promising them to register foreign employment companies, the paper said.
Belbase has been accused of demanding Rs 250,000 from different manpower companies.
Belbase is also a politburo member of CPN-ML sent his resignation via fax to PM. CPN-ML is one of the ruling parties in the incumbent government led by the Unified Communist Party of Nepal (Maoist).