NEW YORK – Gov. Eliot Spitzer resigned in disgrace Wednesday after getting caught in a prostitution scandal that shattered his corruption-fighting, straight-arrow image, saying: “I cannot allow my private failings to disrupt the people’s work.”

Spitzer made the announcement without having finalized a plea deal with federal prosecutors, though a law enforcement source familiar with the investigation said he is believed to still be negotiating one. The official spoke on condition of anonymity because of the sensitivity of the case.

“Over the course of my public life, I’ve insisted, I think correctly, that people regardless of their position or power take responsibility for their conduct. I can and will ask no less of myself,” Spitzer said at a Manhattan news conference with his wife, Silda, at his side. He left without answering questions.

Spitzer will be replaced on Monday by Lt. Gov. David Paterson, who becomes New York’s first black governor. He also will be the state’s first legally blind governor and its first disabled governor since Franklin D. Roosevelt.

Paterson said in a statement that he was saddened, but would move forward. “It is now time for Albany to get back to work as the people of this state expect from us,” he said.

Spitzer’s dramatic fall began Monday when allegations surfaced that the 48-year-old father of three was the man identified in court papers as “Client-9,” who spent thousands of dollars on a call girl named Kristen at a swanky Washington hotel on the night before Valentine’s Day. Later details leaked from investigators alleged he was a repeat customer who spent as much as $80,000 with the high-priced prostitution service over an extended period of time.

Spitzer was more composed than he was earlier in the week, when he apologized for an undisclosed personal failing and looked pale, drawn and glassy-eyed. His wife took deep breaths as each of Spitzer’s words was accompanied by a rush of camera clicks. She glanced in his direction, but they did not touch.

“I look at my time as governor with a sense of what might have been,” Spitzer said.

Spitzer’s resignation came after two days of furious calls for him to step down. Republican leaders had threatened to file impeachment papers if he didn’t step aside by the end of Wednesday.

The case started when banks noticed frequent cash transfers from several accounts and filed suspicious activity reports with the Internal Revenue Service, a law enforcement official told The Associated Press. The accounts were traced back to Spitzer, leading public corruption investigators to open an inquiry.

FBI agents recorded phone calls of Spitzer arranging a tryst and they put him under surveillance at least twice – on Jan. 26 and Feb. 13 – to confirm that a prostitute joined him at the Mayflower Hotel, according to a senior law enforcement official with knowledge of the case. The official spoke on condition of anonymity because of the sensitivity of the investigation.

The surveillance was necessary as part of the investigation into whether Spitzer violated the Mann Act, which makes transportation of someone across a state line for prostitution a federal crime, the official said. Authorities in Washington now are weighing whether to prosecute Spitzer for soliciting and paying for sex – a felony in the District of Columbia, the official said.

Whether U.S. Attorney Jeffrey Taylor, who prosecutes federal and local laws in the District of Columbia, will bring charges against Spitzer likely depends on the plea deal the governor is negotiating with the government in New York, two senior law enforcement officials said.

In a statement issued after Spitzer’s resignation, U.S. Attorney Michael Garcia said there was no deal with the fallen governor: “There is no agreement between this office and Governor Eliot Spitzer, relating to his resignation or any other matter.”

Spitzer, a first-term Democrat, built his political reputation on rooting out government corruption, and made a name for himself as attorney general as crusader against shady practices and overly generous compensation. He also cracked down on prostitution.

His hard-charging ways earned him the nickname “Sheriff of Wall Street.” Time magazine named him “Crusader of the Year,” and the tabloids proclaimed him “Eliot Ness.”

As news of his resignation spread on the floor of the New York Stock Exchange, some traders applauded. One trader said some firms even cracked champagne open in celebration – a ritual usually saved for if the Dow Jones industrials hit a milestone.

The square-jawed graduate of Princeton University and Harvard Law was sometimes mentioned as a potential candidate for president. He rode into the governor’s office with a historic margin of victory on Jan. 1, 2007, vowing to stamp out corruption in New York government in the same way that he took on Wall Street executives with a vengeance while state attorney general.

His term as governor has been fraught with problems, including an unpopular plan to grant driver’s licenses to illegal immigrants and a plot by his aides to smear his main Republican nemesis. The prostitution scandal, some said, was too much to overcome.

White House press secretary Dana Perino responded to Spitzer’s resignation by repeating that President Bush views it as a “sad situation” and has Spitzer and his family “in his thoughts and prayers.”

Spitzer is the first New York governor to leave office in scandal since William Sulzer, who was impeached and removed in 1913 over campaign records.

Barely known outside of his Harlem political base, Paterson, the 53-year-old incoming governor, has been in New York government since his election to the state Senate in 1985. He led the Democratic caucus in the Senate before running with Spitzer.

Though legally blind, Paterson has enough sight in his right eye to walk unaided, recognize people at conversational distance and even read if text is placed close to his face. While Spitzer is renowned for his abrasive style, Paterson has built a reputation as a conciliator.

At a morning news conference, Senate Majority Leader Joseph Bruno, Spitzer’s chief rival, said he was moving on with the business of the state. Lawmakers were set to vote on budget bills Wednesday afternoon.

“It’s stunningly tragic. Everybody is piling on, talking about what Eliot Spitzer did wrong. One of the things he did right was to ask David Paterson to be his lieutenant governor,” said U.S. Rep. Steve Israel, D-N.Y.

Copyright 2008 The Associated Press.