The Equality and Human Rights Commission, chaired by Trevor Phillips, has lost its chief executive and two commissioners in the last week.
Nicola Brewer, the chief executive, has left to begin a new job, although her new position has not yet been disclosed.
Patrick Diamond, head of strategy, has left to join Downing Street as an advisor, while Kay Hampton, one of 17 commissioners, is to step down.
According to reports, staff expect more resignations in coming weeks with disability campaigner Sir Bert Massie considering his position.
The Times suggests that staff feel the watchdog is too close to the government and not aggressive enough in protecting those in need of its services.
Other complaints include those of mis-spending.
The comission receives £70 million of taxpayer’s money each year.
A source told the Observer that the crisis was partly a reflection of “what’s going on in government between Mandelson and Harriet Harman, in the Equality Bill”.
Last month, business secretary Lord Mandelson suggested that the government should sacrifice any planned laws that would be expensive for businesses in light of the financial crisis.
Mandelson and Phillips are good friends, with the business secretary acting as the latter’s best man at his wedding.