LORD CAITHNESS, the Minister of State for Transport, resigned from the

Government last night following the death of his wife.

Downing Street said the Prime Minister was deeply saddened by the

tragic news and in the circumstances accepted Lord Caithness's

resignation.

Lord Caithness, the Minister for Aviation and Shipping, said he wished

to resign in order to devote more time to his children.

Diana, Countess of Caithness, who was 40, was found dead at the family

home in Chipping Norton, Oxfordshire, on Saturday evening. Thames Valley

Police said last night that officers called to the house by Lord

Caithness at 6.30pm discovered her body in a bedroom.

''No-one is being sought in relation to this tragic death, which is

now a matter for the coroner,'' a police statement added. Some newspaper

reports suggested that the countess had committed suicide.

The couple had two children, a son and a daughter. Heir to the title

is Lord Berriedale, 12.

The 45-year-old earl has been probably the most hard-working Minister

in the House of Lords for several years, serving several departments and

often answering questions even on behalf of departments he has not

represented.

Apart from the tragedy involved, his departure from the Government

Front Bench in the House of Lords will be a severe blow for the Prime

Minister. The earl is a notable all-rounder, apparently able to fill any

bill in the upper house at a moment's notice. He masters briefs swiftly

and comprehensively.

He is the 20th Earl, having succeeded his father to the title in 1965.

He was educated at Marlborough College and the Royal Agriculture

College, Cirencester.

He was married exactly 19 years ago yesterday on January 9, 1975.

Lord Caithness has been an official spokesman on Health, Social

Security, Scotland, Transport, the Home Office, and Environment as well

as having served as a whip. He has probably represented more Government

departments than any Government Minister for many years.

His full resignation statement reads: ''Following the death of my

wife, I have told the Prime Minister that I wish to resign from the

Government in order to devote more time to my children.''

Mr John MacGregor, Transport Secretary, said last night: ''This is a

terrible personal tragedy and my heart goes out to Malcolm Caithness and

his family.''

Lord Caithness spent his most difficult moments as Shipping Minister

when the oil tanker, the Braer, foundered off the coast of Shetland last

year, writes Elizabeth Buie.

Despite promising a wide-ranging inquiry into the disaster and full

compensation, he faced a barrage of criticism from opposition parties

and Merchant Navy officers.

The Orkney and Shetland MP, Mr Jim Wallace, described the episode as a

''learn nothing, do nothing'' experience on the part of the Government.

The two main inquiries into the accident have still to be published

and access to the seas around Shetland remains largely unregulated. A

recent study found tankers ignoring voluntary restrictions and passing

close to the south of the island.

Lord Caithness has faced repeated calls to introduce a radar and

surveillance system for the island and to introduce mandatory exclusion

zones near environmentally sensitive areas.

Although Lord Caithness lived in Oxfordshire, the official seat of the

earldom is a 15th century ruin, Girnigoe Castle, on the north-east coast

of Caithness. He also owns neighbouring Sinclair Castle, which is also a

popular tourist haunt.

Lord Caithness's wide-ranging and frequently changing responsibilities

testify to his ability as a safe pair of hands.

He began his government career in 1984 with multiple roles as a whip

and Lords spokesman on health and social security as well as Scotland.

He became a junior transport Minister in 1985 and Minister of state for

the Home Office the following year.

Posts at the Department of the Environment during the poll tax

legislation, Foreign Office followed before he returned to the

Department of Transport.

Most recently, he had the task of trying to persuade the House of

Lords to accept the Government's proposals for rail privatisation.

Lord Caithness was born in Burma in 1948, while his father was acting

as military advisor to the Government.

As a child he lived at Balmoral Castle, where his father was the

Queen's factor, and he was a playmate for Prince Charles and Princess

Anne in the holidays.

Because of his long association with the Royal family, Lord Caithness

was Princess Anne's escort and dancing partner at many of her first

dances and society balls when she was 17.

The resignation was the bleakest possible start to a new year for the

Prime Minister after a supposed holiday break that has seen his

Government rocked by an extraordinary series of scandals and

resignations.