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State Services Commissioner Iain Rennie announced today he had been in "talks" with Ms Longstone for a month, and a joint decision had been reached between them three weeks ago.
Mr Rennie said Ms Longstone's relationships had been strained, not only with Ms Parata, but also with sector groups outside the ministry.
Mr Rennie said the troubles in education this year had been the "tipping point" in the relationship between the Minister and the Secretary for Education.
The year the ministry had come under fire over Christchurch school closures and merger proposals, the Novopay payroll system, charter schools, releasing National Standards data and closures of residential schools.
Former Public Service chief executive Peter Hughes will be acting chief executive and Secretary for Education from February 9 next year.
The State Services Commission will advertise for a permanent replacement in the New Year.
"Following very careful thought and discussion, Lesley and I have decided that the best interests of the Ministry would be served by her stepping down and the appointment of a new Chief Executive," said Mr Rennie.
"The relationship with the Minister has certainly been an important factor in Lesley and my decision."
He would not say if Ms Parata had played a role in the resignation.
He said the last six months had been especially challenging for Ms Longstone in her role as chief executive and Secretary of Education at the ministry.
"Despite the best efforts of Lesley to work through a number of issues there now needs to be focus on rebuilding critical relationships that have been strained - this decision has followed very careful thought and discussion.
"Lesley and I have decided that the best interests of the Ministry would be served by her stepping down and the appointment of a new chief executive.
"I respect the very difficult decision that she has made."
Despite accepting her resignation, Mr Rennie said Ms Longstone was highly capable and committed, and he would consider employing her in the state services sector if a suitable job was available.
Ms Parata acknowledged Ms Longstone's resignation and thanked her for her efforts.
"It's been a difficult period and there have been a series of tough issues to deal with."
Labour's education spokesman Chris Hipkins is calling for Ms Parata to also go.
"Hekia has been a disaster as Education Minister. Everything she has touched she has stuffed up - from class sizes and school closures to Novopay and charter schools. Her tenure as minister has been a series of blunders, botch-ups and bungles," he said.
Greens' co-leader Metiria Turei said Ms Longstone must not be a scapegoat for the Education Minister after what she calls a "destructive" year in education.
"Lesley Longstone's departure must not come at the expense of the Minister taking responsibility for overseeing this mess."
Ms Longstone moved to New Zealand from the United Kingdom 13 months ago to take on the role.
She will return to the UK for Christmas as planned, but will return to New Zealand to wrap up her work at the ministry, before finishing by February 8.
Mr Rennie said a severance package had been agreed with Ms Longstone, but details would not be released until next year.