Deputy Premier Peter Jenkins has resigned from the cabinet as deputy premier and has quit the Yukon Party, Premier Dennis Fentie announced early this afternoon.

Minutes before the legislature began sitting at 1 p.m., Fentie called a press conference to make the announcement.

He said a demand letter was sent last week to Jenkins on the issue of his $300,000 in outstanding government loans.

Jenkins' response to the government, Fentie explained, was that the Yukon government would have to accept an offer from him, or else.

The premier said the government accepted the or-else.

Fentie also indicated he was planning to remove Jenkins from cabinet in any case, because the issue of the outstanding loans was heading to court in a legal battle between Jenkins and the government.

Jenkins is in default of loans made to him and his Dawson City business.

The Yukon Party government committed itself to chase down the loans, and entered into an agreement earlier this with Dana Naye Ventures to have the company collect on all delinquent loans.

Fentie noted the demand letter this morning during an unrelated press conference (see p. 5) when asked about last week's Copperbelt byelection, and the suggestion that Jenkins' outstanding loans hurt the Yukon Party candidate.

Jenkins began sitting this afternoon as an independent MLA. He is seated next to his Liberal adversary, MLA Pat Duncan, who moved to the back row with today's arrival of Liberal Leader Arthur Mitchell to the chamber.

As the legislature began its business, Fentie delivered a polite wave to Jenkins.

The most senior of Fentie's cabinet, Jenkins was also the party house leader, and held the portfolios for Health and Social Services and Environment.

He leaves the party he once headed as the sole Yukon Party member in the house, a position he gave up when Fentie jumped from the New Democratic Party to seek the leadership of the territory's conservative party prior to the 2002 general election.

Jenkins could not be reached for comment before the legislature convened.

See more coverage in tomorrow's edition.