A councillor facing criminal charges over benefit irregularities has resigned to clear her name – in the latest embarrassment to Islington’s ruling Labour party.

Councillor Shelley Coupland, member for St Peter’s ward, appeared at City of Westminster Magistrates’ Court on Wednesday last week charged with failing to notify changes to the Department for Work and Pensions.

She is charged with not declaring she was getting an income from being a councillor between 2006 and 2008 while claiming a carers allowance.The total overpayment of benefit is �11,343.

Cllr Coupland stepped down from the council the same day, with the Labour group saying she wanted to focus on proving that she was innocent.

Councillor Kate Groucutt, chief whip of the Labour Group, said “The people of Islington expect the highest standards from their elected representatives and Cllr Coupland has made the right decision to resign so she can focus on clearing her name.Shelley is a very popular local councillor, whose priority has always been serving her constituents in St Peter’s ward. She has protested her innocence.”

It comes barely a month after Councillor Barbara Sidnell quit her position as executive member for community safety after claiming more than �2,600 in childcare expenses she was not entitled to.

Emily Thornberry, MP for Islington North, said: “It has come as a great shock. She [Cllr Coupland] is quite right to resign.

“It is a serious matter and it is very important that people in St Peter’s ward have someone one who can focus entirely on their needs.”

Councillor Phill Kelly, Mayor of Islington, said: “A notice of a by-election will be published in due course.

“On behalf of the council I would like to thank Shelley Coupland for her dedicated service to her constituents over the past five years.”

Councillor Terry Stacy, the leader of the Liberal Democrat opposition at Islington Council, said: “I’m shocked if this is the case because councillors need to be whiter than white. Following Barbara Sidnell having to step down, Labour in Islington is in a bit of a sorry state.”

Coupland, of Steeple Walk, Islington, will appear in a plea and case management hearing at Southwark Crown Court on August 5.