The St George Illawarra Dragons have confirmed that Craig Young has stood down from his role, effective immediately.

Young has served as chairman of the club for the last 12 months, and was due to move back to a role as a director in November, when WIN CEO Andrew Lancaster takes over as chairman.

The Dragons are run by both the Illawarra and St George sections of the club, with the two rotating the chairman position.

Young has decided to stand down immediately though after an incident which saw him use the official club letterhead to write a character reference for former NRL player Brett Finch during a recent legal issue.

Young admitted afterwards he shouldn't have used the club letterhead, and has today decided to stand down from his role in the fallout from the incident.

"I have this afternoon advised my colleagues of the Board of the St George Illawarra Dragons of my decision to stand down as a director of the club immediately," Young said in a club statement.

"I believe it is in the best interests of the club – the interests I have always proudly sought to work for and positively represent.

"I believe this is the appropriate action, given my individual decision to provide a personal reference on official letterhead, for which I have already apologised.

"I regret my error in judgement to provide the reference on letterhead, at the request of legal representatives.

"I do not regret my decision to provide a character reference for a long-time family friend as to his character and behaviour, prior to a damaging addiction."

Lancaster will take over as chairman immediately.