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There was also controversy when it was revealed that she received a pay rise after the election which means she earns more than the new First Minister.
Chief adviser and former Labor general election campaign director Morgan McSweeney will replace Ms Gray as Downing Street chief of staff.
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In a written statement, Sir Keir Starmer said: “I want to thank Sue for all the support she has given me, in opposition and government, and her work to prepare us for government and n get started on our change programme.
“Sue has played a vital role in strengthening our links with the regions and countries. I am delighted that he will continue to support that work.”
In the same written statement, Ms Gray said: “I am pleased to have accepted a new role as the Prime Minister’s ambassador for the regions and countries.
“Having led the Labor party’s preparation for government and kick-started work on our change programme, I look forward to drawing on my experience to support the First Minister and Cabinet to help achieve the government’s objectives across UK countries and regions. As well as building a close partnership with devolved governments, I am delighted that this new role will mean continuing to work alongside the UK First Minister, Deputy First Minister, Cabinet and Mayors on devolution in England and support them.
“It has been an honor to take on the role of Chief of Staff, and play my part in delivering a Labor government. Throughout my career my first interest has always been public service. However, in recent weeks, it has become clear to me that intense commentary about my position risks distracting from the government’s vital work of change. That is why I have chosen to stand aside, and I look forward to continuing to support the First Minister in my new role.”
It follows a difficult start to life in government for Sir Keir and his party.
Labor has faced a backlash after announcing that it will begin means-testing the winter fuel payment to pensioners, and its decision not to remove the cap on two-child benefits.
With chancellor Rachel Reeves’ first budget expected to bring drastic public spending cuts, the First Minister is under fire from the left of his party, while he has also faced criticism for his handling of the conflict in the Middle East.
There was also controversy over gifts received from government ministers, with Sir Keir agreeing to pay back some of the freebies he received including tickets for Taylor Swift’s Eras Tour.
Conservative leadership hopeful Robert Jenrick said: “Less than 100 days in and this Labor Government is in complete disarray.
“(Sir Keir) Starmer is without a national security adviser, a private secretary and the most senior civil servant has hastened his departure.
“Now his hand-picked chief of staff has been forced out by vicious battles from Labour. This Government is in free fall.”
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