Ontario's health minister bowed to months of opposition pressure and tendered his resignation Tuesday on the eve of a report into how the province spent $1 billion over 10 years to create electronic health records and handed out millions in untendered contracts, The Canadian Press has learned.

Sources told the news agency David Caplan notified Premier Dalton McGuinty that he would step down in advance of the auditor general's special report into eHealth Ontario.

Liberal government sources refused to confirm Caplan's resignation. A spokesman for McGuinty said only that the premier would respond to the auditor's report at a news conference Wednesday that was originally scheduled to be Caplan's event.

Auditor General Jim McCarter will release a 50-page special report, which was commissioned last June as the Liberal government tried to defend itself against growing reports about sole-sourced contracts and expense claims by high paid consultants at eHealth.

Those questionable expenses included allowing consultants who were paid up to $2,700 a day to bill taxpayers extra for minor purchases like tea and snacks.

So far, the media have reported on millions in untendered eHealth contracts that were given to consultants, some of whom had close ties to top executives at the provincial agency, and were even paid for consulting each other, driving up their fees.

Even now, months after the scandal first broke and forced the government to replace both eHealth CEO Sarah Kramer and chair Alan Hudson, there are still almost 300 consultants under contract at the agency - down from 385 in April.

The departures of Kramer and Hudson did little to quiet opposition demands that Caplan resign. In 2007, the political veteran weathered the scandal over insider wins at the Ontario Lottery and Gaming Corp., which also saw the opposition calling for his ouster.

Details of some controversial eHealth contracts have been spilling out since last May, including one $30-million, sole-sourced deal for IBM that was approved by a powerful committee of the Liberal cabinet and could prove very troubling for the government.

That's because most of the other contracts were given out by Kramer, who was paid $317,000 at the height of the scandal to leave the job she had held for less than a year, or by other eHealth executives and were not specifically approved by cabinet ministers.

"What we've heard from this government up until now is it's an arms-length agency, they've been making their own decisions, but clearly it's happening at the highest levels of government as well," said Progressive Conservative critic Christine Elliott.

"The example has been set that it's OK to do that, and so we've seen these agencies follow suit."

The New Democrats agreed the IBM contract could be key to the auditor general's report Wednesday.

"It goes to the point that the corruption and the rot goes right up to the top," said NDP Leader Andrea Horwath.

"The propensity to shove these contracts out the door without a proper tendering process went straight to the top, to management board of cabinet."

The opposition parties had been demanding Caplan's resignation for months, saying the government was quick to replace bureaucrats like Kramer and Hudson but wouldn't hold a cabinet minister responsible.

"They've thrown as many people as they can under the bus, and now the circle is tightening and sooner or later it's going to be one of their own that will have to step down," Elliott said Tuesday before word of Caplan's resignation broke.

The NDP also said Caplan had to resign if the government wanted to move beyond the eHealth scandal, and rejected the Liberals' defence that the problems covered in the auditor general's report will date back a decade, four years before they came to power.

"All of these scandals happened under their watch, so for the government to try to deflect blame to historic practices is unacceptable and it's just that, a deflection of the highest order," said Horwath.

Governments of all stripes in the past allowed untendered contracts, but the Liberals changed the rules for all ministries and arms-length agencies, boards and commissions to prohibit the practice, Deputy Premier George Smitherman told the legislature Tuesday.

"We've set a new standard and eliminated the prospect for sole sourcing," said Smitherman.

"They did it. We've done it. It's been the pattern, but it's been changed and we've raised the bar."

EHealth was set up last fall after its predecessor, Smart Systems for Health, spent about $650 million and produced so little it was quietly shut down on a Friday and replaced with eHealth the next Monday.