The political crisis surrounding Tung Chee-hwa's government deepened

dramatically last night when two of his most senior officials

Financial Secretary Antony Leung and Secretary for Security Regina Ip

_ resigned in quick succession.

The government announced Ip's resignation at 7pm, followed just under

21/2 hours later by the announcement Leung had also quit.

The government said the Chief Executive would fly to Beijing on

Saturday and "call on leaders of the Central Government and brief

them about the latest situation".

A smiling Tung left government headquarters at about 9.30pm, waving

goodbye to waiting reporters but offering no comments.

Secretary for Economic Development and Labour Stephen Ip was named

acting Financial Secretary.

Leung will leave the government "with immediate effect" but Ip, who

handed in her resignation last month, will stay on until next Friday.

The government did not explain why Leung was allowed to go immediately

when standing procedure requires a month's notice.

Tung said he had failed to persuade Ip to change her mind. In a

separate statement concerning Leung, Tung said he had decided to

"respect his wish and accept his resignation".

Leung's resignation came the day after the Independent Commission

Against Corruption handed a report on its investigation into the

car-tax scandal surrounding him to the Department of Justice. Leung

has been under fire for buying a new car just before he announced a

hefty rise in the new vehicle tax in the budget.

Observers said regardless of whether the Department of Justice decided

to prosecute, Tung had no choice but to let Leung go.

The resignations also follow calls for principal officials to step

down after 500,000 people took to the streets on July 1 in protest

against the Article 23 anti-subversion legislation that has since

been shelved and the Tung administration.

Ip resigned on June 25, saying her decision was "entirely due to

personal reasons" . She said she "deeply regrets" that the

legislative work of the National Security Bill was not completed as

scheduled.

Tung said: "I tried to persuade her to stay on and suggested that she

might take a long leave first to get some rest and sort out her

personal matters before making up her mind. But regrettably, I could

not change her decision."

Tung praised Ip's "most outstanding performance" , saying with "her

exceptional abilities and great wisdom, she has resolved many thorny

issues, and has earned the esteem of colleagues in the service". He

appreciated her enthusiasm in serving the SAR and would "miss her

greatly".

In a statement issued last night to the "citizens of Hong Kong", Ip

said she would like to thank "those members of the public who have

stood by me throughout the years for their unfailing support".

Ip said she was most grateful for Tung's support and trust.

She thanked her colleagues and also members of the Legislative Council

and the press.

Leung said in his statement: "I believe my departure now may be good

timing, firstly because the budget has been passed by Legco; Sars has

been contained; the economic relaunch measures are under

implementation; and the entry into the Closer Economic Partnership

Arrangement with the mainland has been successfully achieved."

A statement issued on Leung's resignation said Tung "decided to

respect his wish".

Chief Secretary for Administration Donald Tsang said: "I feel very

sorry about the departure of Regina . . . we have worked together for

over three decades. She was an excellent public officer, totally

dedicated to Hong Kong, worked extremely hard, and possessed

unrivalled leadership qualities. Whenever she was faced with a

challenge, she was ready to accept it, took it on board and did her

very best."

But he added: "Circumstances in the past few weeks have been most

testing, and as a close colleague, I respect her decision."

Ip was still making public appearances earlier in the day before news

of her resignation broke. She attended a breakfast meeting of the

Australian Chamber of Commerce with Solicitor-General Bob Allcock to

brief members about the government's latest position on Article 23,

but did not make any comment afterwards.

Ip's resignation ended months of speculation that she was stepping

down. Calls were mounting for her to go after the mass protest on July

1, followed by two similar rallies in the past fortnight.

But sources said Ip had been contemplating leaving long before those.

It is understood Ip first discussed her intention to leave with Tung

in March, and had told close friends she would be leaving at the end

of the month, when the National Security Bill was expected to have

been passed.

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