The police minister in Australia's most populous state was forced to quit today over reports he "dirty danced" in underwear over the chest of a female colleague in a drunken late-night office party.

Matt Brown resigned just three days after being sworn in as police minister of New South Wales state, which includes Sydney.

"I'm a human being and I made a mistake and I am going to cop the consequences," Brown told reporters. "I am not wanting to duck or weave this issue. As you can imagine this is a pretty tough day for me." Witnesses said Brown stripped down to his underpants and danced to loud techno music on a green leather Chesterfield lounge before he "mounted the chest" of a female politician and simulated a sex act.

Brown did not deny stripping, but said he had not tried to simulate sex with his colleague. The party occurred in parliament three months before Brown was sworn in as police minister. The resignation was a blow to the centre-left state government, already reeling from months of political scandal, leadership instability and poor opinion polls. NSW accounts for 30 percent of Australia's $1 trillion economy.

State Premier Nathan Rees, sworn in with Brown after a leadership tussle, promised a more accountable government and said Brown had to go because he initially promised that "absolutely nothing untoward" occurred during the party.

"I subsequently put it to former minister Brown late last night that 'there are too many reports of you in your underwear for me to ignore'," Rees told local radio.

"Embarrassed doesn't begin to describe it. He conceded he'd been in his underwear and that gave me no option but to demand his resignation," Rees said.