Prime Minister Julia Gillard's center-left Labor Party government recruited Peter Slipper from opposition ranks to the speaker's post last November in a move that effectively gave her administration a two-seat majority on most votes in the House of Representatives.
Her minority government is trailing the conservative opposition in opinion polls and could be forced to hold early elections if it loses a no-confidence motion in the 150-seat chamber.
Because a speaker can only vote to break a tie, Slipper's appointment freed up the vote of his predecessor, Harry Jenkin, for Labor.
Since then, independent lawmaker Andrew Wilkie withdrew his support for the government because Gillard broke a promise to enact legislation to protect gambling addicts from slot machines.
Slipper resigned hours after surviving an unprecedented opposition motion to remove him Tuesday by one vote.
He pledged to stay in Parliament until the next elections, which are due in late 2013.
Slipper had agreed to stand aside from his parliamentary duties since April over a Federal Court suit that alleges he sexually propositioned his gay media adviser James Ashby.
Slipper denies the allegation, but has apologized for recently released text messages he admits he sent to Ashby which have been described as vulgar and misogynist.
"I leave this position without rancor and with a great deal of sadness," Slipper told Parliament.
With Labor lawmaker Anna Burke elected to replace him, Gillard has now become reliant on Slipper as one of seven independent and minor party lawmakers to pass her legislative agenda. Labor holds 71 seats including the speaker while the opposition holds 72 in the chamber.