Natascha Engel told Greg Clark, the Secretary of State for Business, Energy and Industrial Strategy, developing the industry will be “an impossible task” despite its “enormous potential”.
In a resignation letter to Mr Clark, she accused environmental activists of being “highly successful” in encouraging the Government to curb fracking.
Greenpeace said ministers should put the fracking industry “out of its misery” and focus instead on developing clean technologies.
Former Labour MP Ms Engel penned her letter following two weeks of protests by the Extinction Rebellion group, which brought parts of London to a standstill with demands to cut emissions to zero by 2025.
She wrote: “A perfectly viable and exciting new industry that could help meet our carbon reduction targets, make us energy secure and provide jobs in parts of the country that really need them is in danger of withering on the vine – not for any technical or safety reasons, but because of a political decision.”
Ms Engel complained that a traffic light system which halts fracking when a tremor with a magnitude of 0.5 is recorded “amounts to a de facto ban”.
“The UK could be on the cusp of an energy revolution the like of which we have not seen since the discovery of North Sea oil and gas,” she wrote.
Fracking, she said, has the potential to create jobs, economic security and provide a cleaner alternative to coal and biomass.
Critics say the amount of water needed for fracking is bad for the environment and claim it releases dangerous chemicals. They also say Governments should focus on renewable energy.
Ms Engel’s resignation letter said: “The UK is currently spending £7 billion a year on importing gas – money that is not being used to build schools, hospitals or fix the potholes in our roads.
“Developing our own shale gas industry would mean money going into the Treasury rather than out.”
It added: “We know shale gas can be extracted safely. We have the best regulations and regulators in the world.
“We know the positive impact it has on local communities, but we are choosing to listen to a powerful environmental lobby campaigning against fracking rather than allowing science and evidence to guide our policy making.”
She said “apart from its uniquely awful name”, the process is “materially no different” to other methods of hydrocarbon extraction.
“We are listening to a small but loud environmental movement that opposes in principle all extraction of fossil fuels,” Ms Engel wrote.
“The campaign against fracking has been highly successful in raising the profile and filling the coffers of some NGOs, but they do not represent local residents nor the wider population.”
In a statement following her resignation, Ms Engel said: “I hope there will be a re-think sooner rather than later which will see policy guided by science, rather than fearmongering.
“There is much to be optimistic about how developing technologies – including fracking – can help us accelerate the reduction in CO2 and grow our economy. Sadly today only those who shout get heard.”
Rebecca Newsom, Greenpeace UK head of politics, said the UK fracking industry had been “stuck in a time warp” for nearly a decade.
“It’s not surprising some of its backers are getting tired of waiting,” she said.
“But what’s bad news for the frackers is good news for everyone else. Faced with a climate emergency, the last thing the UK needs is an industry that will only worsen our dependence on fossil fuels for decades to come.
“UK fracking has been a total waste of time, and we can’t afford to waste any more of it. Ministers should put this industry out of its misery and focus instead on backing the clean technologies like renewables and electric.