Premier Colin Barnett says Mr Buswell called him at home on Sunday afternoon to advise him of his decision to resign.
The premier said Mr Buswell had crashed his ministerial car into the front fence of his Subiaco home in the early hours of February 23.
A witness told The West Australian newspaper they had to stop their vehicle to avoid being struck by Mr Buswell’s white Holden Caprice on Roberts Road.
The witness said Mr Buswell then crashed into the front fence of his home and spun the car’s tyres before managing to park in the driveway.
Mr Buswell was reportedly returning from a wedding.
Police have not charged him with any offences but began taking photos of the damaged car and fence on Monday morning – more than a fortnight after the accident.
Troy has had a turbulent career – tragically maybe it all became too much.
Mr Barnett said Mr Buswell’s chief-of-staff informed him on February 24 that he had suffered a breakdown, but the premier’s first knowledge of “anything to do with erratic driving” was on Sunday afternoon.
Last week, when reporters noticed Mr Buswell was absent from cabinet, the Premier said he was on personal leave for health reasons and asked for his privacy to be respected.
“Troy had had a breakdown and asked to keep that private, which I did,” Mr Barnett said.
“I knew Troy had been out the night before.
“I was not prying into the particulars.
“My concern was about his care and welfare.”
He said Mr Buswell had been in hospital in Perth as well as a clinic in Sydney, and remains under medical care.
“He is not in a good place,” Mr Barnett said.
“It was later in that first week when he was admitted to hospital that it was more serious.
“It is a very sad day, and a sad situation he found himself in.”
Mr Barnett said he didn’t regret standing by Mr Buswell during his many controversies over the years.
“Troy has had a turbulent career – tragically maybe it all became too much.
“People in high profile positions are vulnerable, under scrutiny continuously, and if someone is prone to depression, it might bring it on.
“He is a brilliant person, (he has) an enormous capacity for work. Unfortunately, he’s also got a serious health issue.”
Mr Barnett said Mr Buswell had no excuse or explanation for the accident, and very little recollection of it.
He was very remorseful.
“I think he feels like he has let me down – I don’t think that. I don’t see it that way,” the Premier said.
Mr Barnett is temporarily taking on Mr Buswell’s roles as treasurer and transport minister, and does not yet know who will deliver the state budget in May.
He’ll remain the MP for Vasse and it’s uncertain whether he’ll stay in politics.
A permanent replacement is expected to be announced later this week.