In a meeting with Pope Francis on Tuesday Matthew Festing (pictured above, right) offered his resignation, Knights of Malta spokeswoman Marianna Balfour revealed.
Mr Festing had refused to cooperate with a papal commission investigating his decision to suspend the Knights of Malta's grand chancellor, Albrecht von Boeselager, on 8th December 2016.
Mr Boeselager's departure followed relevations the order's charity division had distributed thousands of condoms to poor people in Myanmar under his watch - something the Catholic Church disagrees with.
In a sharply worded statement, the Holy See last week said it plans to take action to resolve the dispute, describing the issue as a "crisis of the central direction".
The condom scandal was described as grave by the Knight of Malta's leadership who also said it was "disgraceful" Mr Boeselager had not heeded Mr Festing's order to resign.
Artificial contraception is forbidden under Catholic church teaching.
Mr Boeselager claimed he stopped the condom distribution programmes when he was made aware of them.
Defending his refusal to cooperate with the papal commission, Mr Festing cited the Knights of Maltas' status as a sovereign entity.
In a letter on 14th January, he also questioned the credibility of the commission, claiming there were "serious accusations of a conflict of interest" involving three of its five members.
The leadership of the Knights of Malta order take an oath of obedience to the pope.