But Greg Dyke's resignation prompted hundreds of BBC employees to walk out of the 81-year-old corporation's two main London offices and demonstrate on the street.
"My main concern is that with the climbing down, the news gatherers will stop their task of questioning the government and holding it to account," said Richard Curtis, 35, an engineer at BBC's Radio 4.
On Wednesday, Judge Lord Hutton criticized the BBC for an "unfounded" report it broadcast last year accusing the government of "sexing up" a prewar dossier about Iraq's weapons of mass destruction with information it knew was wrong.
Gavyn Davies, the chairman of the BBC's board of governors, resigned hours after Hutton's decision — the first time the top executive at the broadcaster has left in a dispute over reporting.
The BBC governors also appeared to bow to pressure from Prime Minister Tony Blair's office, issuing an apology after an emergency meeting to discuss the findings of the Hutton inquiry.
Lord Ryder, acting chairman of the BBC board of governors, said the network had to confront "serious defects in the corporation's processes and procedures. On behalf of the BBC, I have no hesitation in apologizing for our errors, and to the individuals whose reputations were affected by them."
Blair accepted the apology, saying it was "all I ever wanted."
"I think what this does now is allow us to draw a line and move on," Blair said.
Before his resignation, Dyke had defended the "greater part" of the story that sparked a bitter fight with Blair's office.
"I hope that a line can now be drawn under this whole episode," Dyke said Thursday, announcing his resignation outside the BBC's headquarters.
"Throughout this whole affair my sole aim as director general of the BBC has been to defend our editorial independence and act in the public interest."
He said, "I think my going is very important in preserving the BBC's editorial independence."
Although Dyke was the head of the BBC, he was not a journalist and did not direct its news operations.
Some of the BBC employees who walked out of their offices Thursday carried signs saying "Bring Back Greg" to demand Dyke's reinstatement.
"I'm totally shocked and devastated, just like the majority of staff in the BBC," said protester Harry Matharu, 42, who works in the technology department at the network's Broadcasting House.
"Greg has done more for the BBC than anyone else. ... I think it's a major tragedy for the BBC that he's gone, and I don't think Greg and Gavyn should have resigned."
Hutton, a senior judge appointed by the government to investigate the suicide of arms adviser David Kelly, cleared Blair and his administration of wrongdoing in connection with the death and criticized "defective" BBC editorial controls.
But a former BBC chairman, Sir Christopher Bland, criticized Hutton's report. He said the judge had "whitewashed the government ... but he tarred and feathered the BBC.
"It is legitimate to question whether Hutton was evenhanded in the way he treated on the one hand politicians, civil servants and the security services, and on the other hand the standards of conduct he applied to journalists and broadcasters," Bland told BBC radio.
Many British newspapers expressed surprise Thursday over what they called a one-sided Hutton judgment. "Whitewash?" asked The Independent in its main headline.
In the conservative Daily Mail, columnist Max Hastings said Hutton "fails to set his story in the context of the BBC's huge virtues and Labour's sore vices."
Most agreed Blair had been utterly vindicated by Hutton of charges he lied about the threat posed by Iraq, with one tabloid calling him "Saint Tony" in a front-page headline.
But some editorials said key questions remained about Blair's controversial decision to go to war, given the failure to find weapons of mass destruction in Iraq.
"The government may have been cleared over Dr. Kelly's death — but that does not mean it was honest about Iraq. It is entitled to Hutton's narrow vindication, but it still has a lot to prove," The Guardian said.
The BBC has so far declined to say whether it will take any action against defense correspondent Andrew Gilligan, who made the criticized broadcast.
Hutton said the 12 BBC governors failed to carry out proper checks on Gilligan's story, which was based on an interview with Kelly, then failed in its duty to inform the public that the information it broadcast might have been wrong.
The verdict was a huge blow for the BBC, which governs itself, even though it is funded by mandatory annual license fees on TV sets.
In December, while bracing for the Hutton report, the BBC announced tough new editorial rules, including stricter guidelines about the reporting of controversial stories based on a single anonymous source.
Michael Howard, the opposition Conservative Party leader, told the House of Commons following the release of Lord Hutton's ruling that the case for independent regulation of the BBC "has never been stronger."
Blair, who criticized the BBC for failing for months to acknowledge its report was wrong, responded by saying there would be a thorough review of the broadcaster's charter.