The chief executive of one of Britain's best-known companies resigned yesterday after admitting lying to a court during a battle to block media coverage of his private life.

Lord Browne, who was scheduled to step down in July after 41 years with BP, could lose up to £15.5m in retirement pay and share options after a newspaper won a legal battle to print details of his four-year relationship with Canadian Jeff Chevalier.

The 59-year-old, who joined BP as an apprentice in 1966, said it was "a matter of deep regret" that in his fight with Associated Newspapers, which publishes the Mail on Sunday, he lied over how he had first met Mr Chevalier.

Lord Browne added that he was resigning to "avoid unnecessary embarrassment and distraction" to BP. His nominated successor, Tony Hayward, will take over immediately.

The BP boss added: "I have always regarded my sexuality as a personal matter, to be kept private. It is a matter of personal disappointment that a newspaper group has now decided that allegations about my personal life should be made public."

Lord Browne was accused of using the company's resources to support or assist Mr Chevalier, by using BP computers and staff, the involvement of BP personnel in setting up and then winding up a company created by Lord Browne for Mr Chevalier to run, and the use of a senior BP employee to run a personal errand by delivering cash to Mr Chevalier.

Lord Browne "denied categorically" any allegations of improper conduct relating to BP.

The company's chairman, Peter Sutherland, said a review of the allegations showed they were "unfounded or insubstantive".

Mr Sutherland added: "It is a tragedy that he should be compelled by his sense of honour to resign in these painful circumstances."

The Mail on Sunday welcomed yesterday's legal ruling.

A spokesman said: "Despite lying to the court, Lord Browne was granted an injunction suppressing information of great importance both to the millions of Britons who, through their pensions, are shareholders in BP, and to the tens of thousands who work for the company."

The spokesman said the newspaper would make its evidence on Lord Browne's deception available to Attorney General Lord Goldsmith, adding: "Jeffrey Archer and Jonathan Aitken went to prison for lying to the courts."

In a second statement, issued later, the Mail on Sunday said it was Lord Browne, by lying, who had made his private life a public issue, not the newspaper.

It said: "Lord Browne chose to suppress this story by arguing to the High Court that, because the story was supplied to us by his former lover, Mr Chevalier, it breached his right to a private life under the Human Rights Act.

"In doing so he tried to undermine Mr Chevalier's credibility as a witness by saying in three separate statements to the court that Mr Chevalier had lied about how they met. In fact, we were able to show that it was Lord Browne who had lied."

The end to Lord Browne's 12-year tenure as chief executive comes as he faced criticism over his pay and stewardship of BP, which yesterday said he would lose at least £3.5m of his retirement package and a possible further £12m in share options because of his decision to step down early.

He faced a revolt at the company's annual meeting in April when nearly one-quarter of shareholders failed to approve directors' salary packages.

The scrutiny over pay awards follows criticism of BP's safety record in two independent reports this year following an explosion at BP's Texas City oil refinery in March 2005, which killed 15 workers.