TORONTO - Another top official at eHealth Ontario is out.

Dr. Alan Hudson has resigned as chairman of the eHealth board, just over a week after the agency's CEO, Sarah Kramer, was dumped and given a $314,000 payout for leaving.

Hudson and Kramer had been under fire for handing out $5 million in untendered contracts, and for allowing consultants to bill taxpayers for snacks on top of their $2,700 a day fees.

Premier Dalton McGuinty says from now on, the government and all its agencies will no longer allow sole-sourced contracts for consulting services.

In addition, under new rules consultants will not be allowed to bill extra for hospitality, incidental and food expenses.

EHealth was set up last fall to replace another provincial agency that spent $650 million trying to develop electronic health records, but failed to produce anything of value.

Ontario's auditor general is investigating the way eHealth awarded contracts and its expense practices, but his report is not expected until September.

The scandal even reached into the premier's office.

Karli Farrow, a former adviser to McGuinty, billed eHealth over $10,000 for 32.5 hours of consulting work in January, work that included consulting Don Guy, the premier's former chief of staff.