A senior politician from Hungary's ruling party said he had been present at a house party in Belgium that was broken up by Brussels police last Friday for breaching lockdown rules but denied taking drugs.
Jozsef Szajer, a leading light in Prime Minister Viktor Orban's ruling conservative Fidesz party and an ally for more than 30 years, quit as a European deputy on Sunday, citing unspecified moral reasons.
In a statement on Tuesday, he apologised for any wrongdoing.
"I regret that I broke the lockdown rules, that was irresponsible of me, and I will accept the sanctions that result," the statement said.
The incident comes at a sensitive time for Hungary's nationalist premier, who is in a bitter dispute with Brussels over rule of law criteria tied to the EU budget, and is tackling a worsening coronavirus pandemic and recession at home.
The leader of Hungary's opposition Momentum party said the scandal showed the "total moral failure" of Fidesz, which portrays itself as a champion of Christian and family values.
Fidesz's European parliamentary group said Szajer had "made the right decision" by resigning. The Hungarian government did not respond to a request for comment.
Belgian police detained about 20 people at the house party in a central Brussels apartment on Friday, two of whom invoked diplomatic immunity, according to a statement by Belgian prosecutors. Coronavirus lockdown rules forbid any gathering of more than four people in a closed space in the country.
In the statement, prosecutors referred to a man by the initials 'S.J.' who they said had been found with narcotics in his backpack after attempting to flee via a gutter and who later identified himself by means of a diplomatic passport.
Hungarian news site Telex.hu cited prosecutors as saying that S.J. was Szajer. Reuters was unable to confirm this with prosecutors or to reach Szajer for comment.
In his statement, Szajer denied taking drugs and said he had offered to take a drugs test at the scene but police did not carry one out.
"The police said they had found ecstasy pills. They were not mine, I know nothing of who put them there and how. I told that to police," he said.
Bulcsu Hunyadi, an analyst at think tank Political Capital, said it was hard to predict whether the incident could have a lasting impact on Fidesz' support. The party leads in opinion polls although in 2019, a sex scandal involving a Fidesz mayor eroded its support in a local election.
"A scandal like this has an impact for some time, but I think in the long term it won't shake Fidesz' really committed voters," he said.