Amid conflict of interest allegations, former Gov. James E. McGreevey (search) resigned Wednesday from a law firm that hired him last year after he left office over a homosexual affair.

The allegations involve McGreevey's legal work on behalf of companies his administration selected two years ago to develop a $1.3 billion entertainment and retail complex.

In a statement announcing his resignation from the firm of state Sen. Raymond Lesniak (search), McGreevey thanked Lesniak for his "friendship and support" during "a very difficult period in my life."

"It is clear, however, that my work with Weiner Lesniak has created distractions," the written statement said. "As such, I have informed Senator Lesniak of my decision to leave Weiner Lesniak effective immediately."

McGreevey's work involved the Virginia-based Mills Corp. (search) and its partner, Mack Cali Realty of Cranford, which were chosen by his administration to develop the Xanadu project at the Meadowlands sports complex.

State employees are barred from doing business related to their work with New Jersey for a year, but there is no such restriction on former governors.

Gov. Richard J. Codey (search) on Wednesday directed his legal counsel to review and possibly make changes to the state's ethics guidelines as they apply to the executive branch.

McGreevey's re-emergence in the public eye on behalf of a developer tied to his administration triggered harsh criticism from environmental and watchdog groups.

"He obviously had a relationship with Xanadu before he left office, when he was a decision-maker over the project. Now that he's not in that office anymore, he's obviously benefiting from his previous relationship," said Dena Mottola of the New Jersey Public Interest Research Group.

Jeff Tittel, director of the New Jersey chapter of the Sierra Club, which has lawsuits against the state over traffic, air quality and other issues related to Xanadu, called the relationship "shameful."

In a written statement acknowledging McGreevey's resignation, Lesniak denied that McGreevey's work was a conflict of interest, citing the current exemption for governors.

McGreevey did not immediately return a phone message left Wednesday night at his office in Woodbridge.