The night before, after a day in which she had revealed her intention to quit to her closest allies, she had been persuaded to at least give it some further thought.

Gordon Brown, among them, had urged her to remain and fight on. "But then she got up, saw the stories and just thought 'I can't do this'," said one shadow minister.

The day before, Wendy Alexander had celebrated her 45th birthday. Politically, her 46th year would begin on the worst possible note.

How a single complaint about the failure to register relatively minor campaign donations led to the downfall of Scotland's most famous female politician can be traced back to this time last year when Alexander began her bid to take over as leader of the Scottish Labour party at Holyrood.

Infamously, she asked allies to find donors willing to offer cash to pay for her campaign challenge. It later emerged that one of those names was an off-shore businessman known as Paul Green. Politicians are strictly forbidden from accepting funds from overseas.

For nine months, Alexander has faced taunts of impropriety and of breaking the law after she accepted the cash, she claims, unwittingly.

Last week, it appears that the latest twist in this saga was simply one turn too many. "It was the proverbial straw that broke the camel's back," said another shadow cabinet member.

Alexander told her colleagues yesterday that she thought of the affair as her personal "burden". The final straw which made that burden to heavy to bear last week was dealt by Holyrood's Standards Committee, the official seven-man panel which sits in judgment on fellow MSPs.

On Wednesday, they had received a report from the Parliament's independent standards watchdog, Dr Jim Dyer, who had concluded that Alexander had broken parliamentary rules by failing to declare the campaign donations on her register of interests.

The committee – which has the power to suspend or even expel MSPs – had to decide what to about it. By five votes to two (both Labour MSPs), they backed Dyer. The following day, they would reconvene to decide whether or not Alexander should be punished.

That evening, Alexander headed to the annual dinner held by Scotland's parliamentary journalists to mark the end of term. Alexander attended but was not in good form. She was developing a heavy cold and the Standards Committee report had further ruined her mood.

Central to her defence in the matter had been the evidence she had produced showing that the Parliament's own lawyers believed there was no need to publish the donations she had received.

But, summing up, committee convener Keith Brown had made no mention of that fact. The writing appeared to be on the wall. She retired to a hotel room in Edinburgh early and began mulling over her future. One friend declared: "She sat late into the night thinking about it and how it would run for months and then into the start of the next parliamentary session.

"When she heard one TV journalist refer to it as 'Hamster Wars' – the disparaging Holyrood term for First Minister's Questions – she thought that the Parliament had probably had enough, and so had she."

That view was also held by Alexander's husband, Brian Ashcroft, say close friends. Ashcroft, an economist who had retired to look after the couple's young twins, had been appalled at the rough treatment his wife was receiving and had, it is claimed, urged her to quit some months earlier. One source close to the pair said last week that Ashcroft again had felt that his wife had simply taken too much.

And behind the immediate issue of the standards inquiry was the growing anger which Alexander felt towards her Labour colleagues outside the Holyrood bubble. She had already accused unnamed Labour insiders at Westminster of practising "black arts" against her. There was a genuine sense of resentment within the Alexander home, and among her allies, at what they saw as disloyalty from some.

Thursday's events would only confirm the couple's growing sense of dejection. Her cold now far worse, Alexander was unable to challenge Alex Salmond at First Minister's Questions. Then, with MSPs heading off home for their summer break, the Standards Committee gave its verdict: by four votes to three, they decided, Alexander should be suspended for a day.

The punishment – such as it was – invited scorn from many, but the crucial factor, in Alexander's mind, was the fact that the final seal on the decision would not take place until September. With Parliament having gone into recess, there was no time for MSPs to vote on it. Thus, the affair would drag on until the autumn.

A Shadow Cabinet member said: "She realised that if she continued, it wasn't going to go away." Another complaint about the way the Standards Committee inquiry had been dealt with by her press team was also heading her way. "There was no end in sight for her. It was time to let the party move on," the MSP said.

On Friday, Alexander called chief-of-staff Jackie Baillie and close ally and fellow MSP David Whitton to the party's Glasgow HQ to inform them of her decision. Both tried desperately to persuade her otherwise.

At this stage, Gordon Brown was brought in. The last thing the PM wanted, say allies, was another Scottish leadership crisis adding to his woes. "No one wanted her to go," said a senior Westminster figure. By evening, Alexander relented, promising to consider matters.

But the wobble had been enough. By early evening on Friday word had got out, and inevitably the papers got hold of it. By Saturday morning, with news stands across the country revealing her mood, it was inevitable.

Shadow Cabinet members were informed in a conference call at 10am. "The mood was dejected," said one. "We all stood behind her but it was clear she had made up her mind." An hour later, flanked by deputy leader Cathy Jamieson, she emerged at John Smith House to brief the cameras.

Alexander put on a brave face, but she was said, behind the scenes, to be unable to hide her devastation.

However, the former leader's allies insist she will be back at work this week – hoping, it is said, to take part in the forthcoming 60th anniversary celebrations of the NHS.

Attention will inevitably turn to the leadership election which will follow. But behind the party's rudderless MSPs' sense of sympathy at the human misery being experienced by Alexander, there is also anger.

"We are now in the worst set of circumstances possible. She has thrown her hands up so 'no-marks' in the SNP can now claim a scalp. In some ways what has happened shows why she shouldn't have been leader."

Another added: "We are back exactly where we were a year ago, without a clue what is going on."

Alexander yesterday freed herself from the "burden" which she has carried for nearly a year. But Labour's misery only looks set to continue.

Runners and riders as party leadership race begins

LABOUR planners will meet this week to hammer out a timetable. The mini-committee includes Scottish General Secretary Colin Smyth, plus the chairman, vice-chairman and treasurer of Labour's Scottish Executive Committee. Any Labour MSP may nominate themselves or be nominated. Nominees must have the support of 12.5% of the 46 Labour MSPs, six MSPs including themselves. If there is more than one nominee, then the election will be held by postal ballot. All Labour MPs, MSPs, MEPs and individual members will have a vote. In addition, members of affiliated unions will ahve a vote.

The favourites

IAIN GRAY

Age: 51

Position: Enterprise spokesman.

Family: Married for the second time; has one daughter and two stepdaughters.

Experience: Former physics teacher, charity worker, Scottish Cabinet minister, and special adviser to Whitehall ministers.

The East Lothian MSP would be the favoured candidate of many in Westminster, where he worked as a special adviser to the Scottish Secretary prior to being elected last year. Prior to that he was Enterprise Minister under First Minister Jack McConnell. His Westminster experience would perhaps put him in a strong position to unite Scottish Labour's now open splits. Even supporters worry if he has enough charisma – though all candidates will suffer in comparison next to the charismatic Alex Salmond.

CATHY JAMIESON

Age: 51

Position: Deputy leader.

Family: Married with one son.

Experience: Former social worker, minister and anti-binge drinking campaigner.

The doughty deputy leader will win grass roots support if she steps forward. Formerly a flag-bearer for the party's socialist wing, 'Red Cathy' is now seen as a 'pragmatic', centre-left politician who, as Justice Minister, won friends within the police. However, many feel that, like John Prescott, she does not have the gravitas for the top job.

ANDY KERR

Age: 46

Position: Public Services spokesman.

Family: Married with three daughters.

Experience: Former senior official with Glasgow City Council, also former minister.

Combative and pugnacious, the East Kilbride MSP is seen by some as the man to take the fight to the SNP in opposition. Kerr was a complete unknown prior to 2000 and owed his rise since then to his close friendship with Jack McConnell who eventually promoted him to Health Minister. However, detractors point out that his TV persona is that of a man woken up at three in the morning.

MARGARET CURRAN

Age: 49

Position: Health and Communities spokeswoman.

Family: Married with two sons.

Experience: Former university lecturer and activist; has also served as minister.

The Labour spokeswoman on health passes the likeability factor with flying colours. When serving in Labour's former Cabinet, she was often referred to as 'Minister for Newsnight', having been picked out as someone who could actually connect with the public at large. However, some suggest she may not have the stomach for the unrelenting pressure of being in charge.