Barclays chief executive Bob Diamond has resigned with immediate effect. The government inquiry and calls for criminal investigations. Mr Diamond said he was stepping down because the external pressure on the bank risked "damaging the franchise". Chancellor George Osborne said he hoped it was the "first step towards a new culture of responsibility" in banking. "It is the right decision for the country," Mr Osborne said, saying the UK needed a strong Barclays concentrating on lending and contributing to economic recovery. Labour leader Ed Miliband said it was "necessary and right" that Bob Diamond stepped down. "But this is about much more than one individual, it's about the culture and practices of the banking industry," he said. [h=2]How Libor scandal developed[/h]27 June: Barclays fined £290m by US and UK regulators for attempting to manipulate Libor rates 28 June: Barclays shares plunge 15% 29 June: Bank of England governor calls for change in banking culture 1 July: It emerges that RBS has sacked four traders over Libor and there are calls for changes in the law to cover Libor-rigging 2 July: Barclays chairman Marcus Agius resigns and the government launches two inquiries into Libor and banking standards 3 July: Barclays chief executive Bob Diamond resigns Timeline: Libor-fixing scandal Who might have lost out? The bank refused to comment on reports that chief operating officer Jerry del Missier, one of the executives to give up his bonus after the Libor fine was announced, was also planning to step down. Mr Diamond will still appear before MPs on the Treasury Committee on Wednesday to answer questions about the Libor affair. "I look forward to fulfilling my obligation to contribute to the Treasury Committee's enquiries related to the settlements that Barclays announced last week without my leadership in question," Mr Diamond said in a statement. Defending the bank's "world class" reputation he said: "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth." 'Shocked and angered' Last week, regulators in the US and UK fined Barclays £290m ($450m) for attempting to rig Libor and Euribor, the interest rates at which banks lend to each other, which underpin trillions of pounds worth of financial transactions. Staff did this over a number of years, trying to raise them for profit and then, during the financial crisis, lowering them to hide the level to which Barclays was under financial stress. George Osborne: "I think Bob Diamond has made the right decision for Barclays and the country" The chairman of the City regulator, the Financial Services Authority (FSA), described the public's outrage at the bank's actions. "The cynical greed of traders asking their colleagues to falsify their Libor submissions so that they could make bigger profits - has justifiably shocked and angered people, in particular when we are facing hard economic times provoked by the financial crisis," Lord Turner told the FSA's annual meeting. Mr Diamond is one of the UK's highest paid chief executives, earning £20m last year, and was described as "the unacceptable face" of banking by the then business secretary Lord Mandelson in 2010. The details of any severance package are not yet known. He was head of Barclays Capital, its investment bank division, when his staff were trying to manipulate the key inter-bank rates. "He maintains that he didn't know what was going on," says BBC business editor Robert Peston. "He feels he was hounded out." It emerged over the weekend that Mr Diamond spoke to the deputy governor of the Bank of England Paul Tucker about Barclays' Libor submissions at the height of the credit crunch in 2008. The details of that telephone conversation will be an important area of questioning at this week's hearing of the Treasury Committee. Barclays' managers came to believe, after the conversation between Mr Diamond and Mr Tucker, that the Bank of England had sanctioned them to lie about what they were paying to borrow when providing data to the committees that set the Libor rate. Investigations are continuing in the UK and the US into other banks over Libor fixing, including criminal investigations by the Department of Justice. The Serious Fraud Office in the UK is looking into possible criminal prosecutions. "We have seen once again in recent months and weeks, both in the US and in Europe including in some of the major banking institutions that practices that have fuelled the financial crisis are not yet eradicated from the sector," said European Commission president Jose Manuel Barroso. "Once again we have been confronted with reckless trading and market manipulation. It is time that these practices stop once and for all and it is time that a sector that owes so much to taxpayer support accepts to hand back a fair share to society."