Diamond's resignation early Tuesday came a day after chairman Marcus Agius resigned, taking responsibility for LIBOR fraud committed by traders between 2005 and May 2009. Diamond was followed out the door later Tuesday by chief operating officer Jerry del Missier, less than two weeks after he was promoted from co-head of Barclays' investment banking unit to the newly created COO post. Highlighting the depth of management disarray, outgoing chairman Agius has been temporarily elevated to full-time executive chairman and will lead the search for new top management.

With Diamond due to appear Wednesday before a committee of U.K. lawmakers, Barclays released evidence on its website suggesting an October 2008 conversation between Diamond and Bank of England Deputy Governor Paul Tucker, conveying the view of senior government officials, had led del Missier to instruct traders to post lower submissions for calculating the critically important LIBOR lending rate, in line with its peers.

During a conference call with journalists, Agius, whose own appearance before lawmakers has been postponed until next week, declined to comment on the evidence, but he said there had been a "genuine misunderstanding" between del Missier, then president of Barclays Capital, and Diamond, then the unit's CEO.

The Bank of England declined comment.

A person familiar with the regulators' perspective noted that the the US Commodity Futures Trading Commission and the United States Department of Justice Fraud Section, along with the Financial Services Authority, had all looked into Tucker's conversation with Diamond and concluded that the Bank of England Deputy Governor had not instructed Barclays to lower its LIBOR submissions.

Agius painted the executives' decision to step down as their own choices amid reports of pressure from both the Bank of England and the FSA.

Agius said that by his own resignation Monday, "what I hoped to do was to lower the temperature surrounding the bank. It became evident as Monday went on that wasn't the case. In fact if anything the temperature rose with the announcement of the parliamentary process that is being proposed."

He added: "It's a measure of these two leaders that they made these decisions, choosing to put the future of Barclays ahead of their own careers."

The government Monday announced a parliamentary inquiry into banking standards along with a review of how LIBOR rates are set.

Diamond, 60, and del Missier, 51, both quit with immediate effect.

Michael Rake, 64, the senior independent director who Monday became deputy chairman and who has been seen as a likely replacement for Agius himself, will help Agius to find new management. Agius wouldn't say how long that might take.

"It could take a while but we will not compromise on quality. It is vital that whoever is chosen will have the credibility they need to do this difficult job and that will result from doing a long and thorough search," he said.

The British bank agreed last week to pay $450 million to U.S. and U.K. authorities to settle charges its traders rigged LIBOR from 2005 to 2009. U.S. and U.K. authorities are also investigating an unknown number of other banks for LIBOR fraud, including Royal Bank of Scotland Group plc, though Barclays became the first to settle.

American-born Diamond, a 16-year veteran of Barclays, led its investment banking unit until taking over from John Varley as CEO in April 2011. Although highly regarded for his work at Barclays Capital, his £17.7 million ($27.8 million) pay packet for 2011, granted at a time when Barclays' revenue and profit fell, invoked the ire of shareholders, politicians and the media.

Diamond said he was leaving because "external pressure" on Barclays since last week's settlement "has reached a level that risks damaging the franchise."

"My motivation has always been to do what I believed to be in the best interests of Barclays," he said. "No decision over that period was as hard as the one that I make now to stand down as chief executive."

He added: "I am deeply disappointed that the impression created by the events announced last week about what Barclays and its people stand for could not be further from the truth. I know that each and every one of the people at Barclays works hard every day to serve our customers and clients."

Daniel Stewart & Co. analyst Simon Willis noted that Agius may struggle to find a replacement for Diamond.

"We find it difficult, given the dearth of senior banking management talent, who Bob Diamond's replacement might be. We believe that it will be harder for Barclays to achieve its growth and [return on equity] targets. At the very least there will be a hiatus period," Willis wrote.

Willis suggested other British banks may face management upheavals as the LIBOR investigations are concluded.

Chancellor of the Exchequer George Osborne on Tuesday told British Broadcasting Corp. that Diamond's resignation was "the right decision" for Barclays and the country.

Dissatisfied by the planned parliamentary probe, Labour opposition leader Ed Miliband has continued to demand a full judge-led inquiry in the vein of the long-running Leveson inquiry into media ethics launched in the wake of a phone-hacking and bribery scandal at the U.K. operations of News Corp.

Barclays shares were down 1.35 pence at 167.05 pence by late afternoon in London Tuesday.