Darren Hughes has resigned from Parliament, Labour leader Phil Goff announced this evening.
The resignation comes two days after it was revealed Mr Hughes, 32, was the subject of a complaint - thought to be of a sexual nature - from an 18-year-old student.
Police are investigating an incident which allegedly took place at Mr Hughes' Hataitai home in the early hours of March 2.
Mr Goff told a hastily-arranged press conference in Auckland that he had accepted Mr Hughes' resignation.
"Events of the past few days have made it increasingly clear to Darren that the controversy around the allegations made against him has made it impossible to carry out his duties.
"In reaching that decision he is adamant that he has committed no offence.
"He needs to focus on clearing his name. I agree this is the right decision.
In a statement, Mr Hughes said his position as an MP had become untenable.
"Although people are commonly thought to be innocent until proven guilty, it has become clear to me that this doesn't apply in the political arena," Mr Hughes said.
"I have done nothing wrong, and I remain confident that the legal process will have the right outcome. "
Mr Goff said Mr Hughes had offered to resign earlier but the Labour leader had wanted to wait until the police investigation was complete.
This evening however, Mr Goff said the events of recent days had made it "increasingly difficult" for Mr Hughes to carry out his work.
"He believes, and I agree, that it is better he stands down from Parliament to focus on clearing his name.
"It is important that the police are able to conclude their investigation without interference."
Mr Goff said his decision to accept Mr Hughes' resignation should not be seen as any indication he believed Mr Hughes had done wrong.
"He'll be gutted by the loss of a job he's wanted to do all his life. This is not necessarily the end for Mr Hughes."
Mr Goff said he had not spoken to his caucus but his deputy leader Annette King - a close friend of Mr Hughes - supported the decision.
"I think she had sensed that it's best for Darren and best for the institution of Parliament that he stand aside by resigning from Parliament."
Mr Goff said he believed he had done the right thing by waiting until now to accept the resignation.
"By requiring his resignation at the beginning, I would have been prejudging that matter."
He said he believed his caucus was totally behind his handling of the issue.
"I think it's a sad day, and I think many people will think it's a sad day."
Mr Hughes said he had "enormous respect for the institution of Parliament" and was not prepared to see his party "distracted in the lead up to a critical election".
His immediate focus was on clearing his name and he would continue to cooperate fully with the police inquiry, he said.
Mr Goff said Mr Hughes would remain a member of the Labour Party.
He said he had not spoken to the people who were next in line on the list to enter Parliament.
Judith Tizard is next on the list and Mark Burton follows.
Mr Goff pleaded with the media not to conduct their own investigations into the case, which could interfere with the police inquiries.
- with NZ HERALD STAFFBy Claire Trevett @CTrevettNZH Email Claire