The revolt and violence in Libya has now claimed the career of an academic thousands of miles away from the crisis.

The director of the prestigious London School of Economics (LSE) has quit over the school’s connections to Libyan leader Moammar Gaddafi.

Sir Howard Davies said he the university's reputation had suffered and he had to step down.

At the heart of the matter was a decision by Davies to accept £300,000 for research from a foundation controlled by Gaddafi's son, Saif.

I have concluded that it would be right for me to step down even though I know that this will cause difficulty for the institution I have come to love, he said. The short point is that I am responsible for the school's reputation, and that has suffered.

Sir Howard also said he regretted having visited Libya to advise the Gaddafi regime on financial reforms, calling the trip personal error of judgment.

Sir Howard is the former head of the Financial Services Authority and deputy governor of the Bank of England. He will remain as the LSE’s chief until a new successor is appointed.

We accept his resignation with great regret and reluctance but understand that he has taken an honorable course in the best interests of the school, said Peter Sutherland, chairman of the LSE's court of governors, adding that Sir Howard was an outstanding director for the past eight years.

The school council has designated an independent inquiry into the university's relationship with the Gaddafi clan and will try to ascertain the institution’s full links with Libya. In addition, the inquiry board will likely alter guidelines governing future donations to the school.

The inquiry will be led by Harry Kenneth Woolf (Lord Woolf), the former Lord Chief Justice of England and Wales and former chairman of the Council of University College London.

Separately, LSE is investigating claims that Saif plagiarized his doctoral thesis which he received in 2008. The son of Libya’s ruler studied LSE and received both an MSc and PhD.