David Cameron was left red-faced yet again this weekend after a businessman he appointed to head a multibillion-pound quango was forced to stand down after it was disclosed that he was bankrupt.

A government spokesman confirmed former Tory Party chief operating officer Tony Caplin had resigned as chairman of the Public Works Loans Board (PWLB) after it emerged he was made bankrupt in 2012.

Whitehall requires anyone serving on a public body who is declared bankrupt to inform the responsible minister.

Mr Caplin, ex-chairman of stockbroker Panmure Gordon where Mr Cameron’s father was a partner, also left his post on the Medical Research Council.

Shadow chief Treasury secretary Chris Leslie said: “For him to be bankrupted in 2012 and appointed by the Prime Minister as chairman of this key Treasury body the following year is surely a misjudgment too far by a prime minister with a track record of poor judgment in relation to his cronies.”