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New South Wales aboriginal affairs minister Milton Orkopoulos has resigned his position as the endorsed Labor candidate for Swansea in the March state election, following the eruption of a sex scandal yesterday.

Orkopoulos is facing 30 charges, including child sexual assault, after being arrested yesterday at his home near Newcastle.

According to documents tendered in court he allegedly used electoral funds to pay a teenage boy for sex.

Orkopoulos says he will be devoting himself full-time to his fight against the charges and will vigorously defend his reputation.

He says he and his family are traumatised by yesterday's events.

Police told the court Orkopoulos used electoral funds to pay one victim $250 a week for sex, telling him the money was for keeping "everything under wraps".

One alleged victim, who is said to have met the MP when he was 15, told police he became addicted to drugs.

He also told police that he and Orkopoulos also used amphetamines during meetings twice a week over several years.

NSW Premier Morris Iemma has sacked Orkopoulos from Cabinet and urged him to resign from Parliament.

"I make no judgement on his guilt or innocence but they are matters that are too serious that I have no choice," Mr Iemma said.

It is not yet clear whether he will continue as an MP until the election.