Economic Development Minister Federica Guidi stepped down on Thursday, hours after it was announced that her partner, Gianluca Gemelli, is under criminal investigation for abusing his personal connection to the centre-left government in a suspected bid to help his engineering company win contracts with French oil group Total.
At the centre of the scandal is a wiretap recording of Guidi telling her partner that an amendment to the budget law related to Tempa Rossa, an oilfield Total is developing in southern Italy, would be approved.
"We should be able to put it to the Senate tomorrow," the minister is heard to say.
Commentators were unanimous in saying the remark had left Guidi, 46, with no option but to quit while Renzi was widely reported to have been left fuming over the damage the episode has done to his government's image.
Prosecutors suspect Gemelli had lobbied for the amendment in return for his company being included in Total's list of preferred bidders for contracts at Tempa Rossa.
'Monstrous conflict of interest'
Opposition leaders seized on Guidi's resignation as fresh evidence that Renzi's administration was every bit as prone to sleaze as its predecessors, despite the youthful premier's claims to the contrary.
"It's the umpteenth monstrous conflict of interest for this government and the ultimate responsibility lies with Renzi," said Matteo Salvini, leader of the far-right Northern League.
Guidi's resignation came almost exactly a year after then transport minister Maurizio Lupi resigned after it emerged a businessman embroiled in a major public works corruption scandal had given Lupi's son a €10,000 Rolex watch
"This fossil of a government needs to call it a day," the populist Five Star movement said in a statement issued by its group in the Senate.
Lawmakers from the Italian Left (SI) and disaffected leftists who were formerly in Renzi's Democratic Party (PD) said the scandal represented a wider malaise caused by the premier's allegedly authoritarian style and preference for secret backroom deals.
"Guidi did the right thing by resigning but it does not put an end to the questions raised by this investigation," they said.
Berlusconi slams wiretaps
The charges against Gemelli emerged from what was originally an investigation into the illegal disposal of liquid waste from another oil extraction plant in the mountainous southern region of Basilicata.
Six employees of the Val d'Agri centre were arrested on Thursday on suspicion of conspiring to disguise toxic material as harmless waste and Italian energy group ENI has suspended production at the 75,000-barrels-a-day facility.
Renzi will have been relieved Guidi went quickly. But he was left to count the cost of a damaging blow to his attempts to portray himself and his government as representing a break from cronyism and corruption.
The 41-year-old continues to enjoy good approval ratings and has won plaudits for pushing through reforms of the labour market and Italy's parliament in the two years since he seized power in an internal party coup.
But he faces a potentially tricky test at local elections expected in June and could have done without this week's scandal.
The ease with which prosecutors were able to tap the phone conversation of a government minister reflects the extensive powers enjoyed by Italian investigators when they are probing suspected corruption.
Partly a legacy of the country's long battle against various mafia groups, these powers are rarely contested although one prominent politician did speak out on Friday.
Former premier Silvio Berlusconi, a convicted tax fraudster who is well acquainted with having his phone tapped, described the treatment of Guidi as a "violation of democracy".