LONDON, JAN. 10 -- Lord Whitelaw, Britain's deputy prime minister, announced his retirement today on medical advice following a minor stroke four weeks ago.

His departure represents a major blow to the government of Prime Minister Margaret Thatcher.

Although Whitelaw, 69, has largely recovered, he said in his resignation letter that doctors had advised him not to subject himself to the stresses of senior ministerial office.

As deputy prime minister, a post Thatcher created for him, Whitelaw was considered a shrewd political consensus builder who frequently moderated Thatcher's hard-line policies within her Cabinet and the Conservative Party.

In her written acceptance of his resignation, Thatcher told Whitelaw that the deputy position was "unique to you for your unique qualities," and said she would not appoint a replacement.

Whitelaw also held the position of president of the Privy Council, the senior body of former and current cabinet ministers and other notables who technically serve as the monarch's link to the government.

Since 1983, when he was named a viscount in the first hereditary peerage created since 1964, he also has served as leader of the House of Lords, which has become a focus for anti-Thatcher dissent. Thatcher was depending on the well-liked and politically astute Whitelaw to shepherd through the domestic reform package that is the centerpiece of her third term.

In a session with American correspondents two weeks before he was taken ill, Whitelaw said he believed the government was in for significant trouble in the Lords over the bills, which aim for wholesale reform of the systems of local taxation and education. Although the upper house of Parliament, whose members hold either hereditary or lifetime peerages, cannot introduce or kill legislation, it can propose revisions that usually have the effect of delaying government bills, sometimes indefinitely.

The Conservatives do not have a majority in the Lords, whose members are not considered bound by party loyalties. While her political defeats in the House of Commons, where the Conservatives currently hold a 102-seat majority, have been virtually nonexistent, the Lords has managed to thwart her on at least 100 occasions over the past eight years.

Even among Conservatives in the Commons, however, the new reform bills are highly controversial, and many Tory members had hoped that Whitelaw would use his influence to persuade Thatcher to moderate the proposed tax and education changes.

He is replaced in the Lords by his deputy there, Lord Belstead, 55, who also now will enter the 22-member Cabinet. Although Belstead has served in a number of junior ministerial positions, he is seen as having minimal political clout.

William Whitelaw's departure from the government ends the 33-year political career of one of Britain's best-known and most popular figures. A tall, stooped figure with a jowly face, he is known throughout the country as "Willie." He is considered one of the last of the Tory grandees, the upper class elite that ran the party for centuries until Thatcher imposed a more rightwing, middle-class leadership.

Following distinguished military service in World War II, Whitelaw first was elected to Parliament in 1955 from the Cumbrian constituency of Penrith, which he served until entering the Lords 28 years later. From 1958, he held an unbroken series of senior government or opposition posts under former prime ministers Harold Macmillan, Alec Douglas-Home, Edward Heath and Thatcher, including chief opposition whip, leader of the House of Commons and secretary of state for Northern Ireland and home secretary.

In 1975, after the Conservatives under Heath had suffered two disastrous electoral defeats, Whitelaw lost a race for the party leadership to Thatcher.