Cynthia Bower has resigned as Chief Executive of the Care Quality Commission (CQC) following a critical DH review.
Bower will remain in her post until Autumn 2012 and the CQC has confirmed she will not receive a final "lump sum" payment.
The announcement coincides with the publication of the DH'sPerformance and Capability Review of the CQC.
It found the scale of regulation has been "underestimated" by both the CQC and DH and more could have been done to manage risk in the regulator's early years.
However, the review does acknowledge that the CQC has made "significant improvements" over the past nine months in increasing inspection staffing and focusing more on its core duties to register and inspect healthcare providers.
The DH has committed to work with the CQC to recruit additional non-executive members to the Board.
Commenting on her resignation, Bower said she felt it "time to move on".
"I am pleased that the Department of Health Performance and Capability review recognises the scale of what has been achieved - and in particular the significant improvements made over the last nine months," she said.
"I'm confident that CQC will continue to build on the progress already made, delivering increasing benefits to people who use services by shining a light on poor care - and I am proud to have played a part in this."
Jo Williams, Chair of the CQC, said she was "very sorry" that Bower had decided to move on, but understands "her desire to take on new challenges".
"I would like to thank Cynthia for her work and leadership and wish her the best of luck for the future," said Health Secretary Andrew Lansley in a statement to MiP.
"Over the last year, we have seen CQC make improvements and respond to the need for enhanced scrutiny and enforcement of standards."