David Cunliffe quits: "I've really searched my soul on this"

- Accepts responsibility for election defeat
- Has stepped down to force a leadership contest
- Grant Robertson says he will run against him

David Cunliffe has resigned as leader of the Labour Party - but has thrown his hat straight back in the ring again by forcing a leadership contest and saying he would stand in that.

It will pit him against the same man he beat last year - Grant Robertson, who this afternoon also confirmed he would contest it.

Mr Cunliffe has spent the last four days pondering his options and said he had "searched my soul" before deciding to stand again. Although he said he took responsibility for the election result, he believed he should stay on to change the party so it could win in 2017.

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He said he was "absolutely not" putting himself ahead of the interests of the party.

"I'm offering myself because I have the experience and the determination to lead the party into 2017."

Labour's values are New Zealand's values. But the election result has reinforced that the Labour Party must change in order to uphold and communicate those values."

Mr Robertson believed he was in with a good chance of beating Mr Cunliffe despite Mr Cunliffe's resounding victory among the unions and party members last year.

"This starts from scratch. A lot has happened in the last year and I'm confident I can get support across all three groups."

However, Mr Cunliffe said he was confident of holding that support. "I'm sure I retain the bulk of the support of the people who supported me in the past," he said. "

Photo gallery: David Cunliffe's highs and lows

He referred to the outspoken criticism of him by caucus colleagues, saying there was "no room for division or airing differences through the media".

Mr Cunliffe made his statement after meeting Labour's NZ Council, who were meeting at the Service and Food Workers' Union offices in Kingsland.

The union refused to let him address media on the premises, possibly wary it would be seen as an endorsement of him, Instead Mr Cunliffe had to move down to the roadside outside a brothel.

Read Cunliffe's full resignation statement here.

Asked if he was disappointed that a contest had been forced, Mr Robertson said he was happy with Labour's party-wide process for electing the leader and had supported it.

"I do want it to focus on a new generation of leadership for Labour and taking this as an opportunity to re-connect with New Zealanders so they see Labour as part of their future."

Party President Moira Coatsworth said the party would decide when that contest would be by Thursday. It will not formally be triggered until Mr Cunliffe officially resigns at caucus on Tuesday.

The leadership contest is expected to cost the party upward of $30,000 - a cost the Party's General Secretary Tim Barnett said was simply the price of democracy in the party.

The party is due to announce details of its post-election review on Sunday but it is expected that will be completed by the end of November. Most of caucus have called for the leadership to be held off until after that point.

Gallery: Cunliffe in cartoons

Both Mr Robertson and Mr Cunliffe have said they would like the leadership to be decided by the end of the year.

Mr Barnett also moved to quash speculation that the party was broke after Mr Cunliffe said Labour needed to boost its fundraising efforts in his election night speech.

Mr Barnett said the party had "hundreds of thousands" in accounts still, even after the election.

Mr Cunliffe had earlier continued to express his desire to remain at the helm of the party and lead it through the 2017 election. But with fierce opposition from inside his own caucus, he did not get the support he needed to continue his mandate.

Today's crisis meeting of the Labour Party hierarchy follows a difficult week for Mr Cunliffe and the party in the wake of last weekend's devastating election defeat.

He smiled at photographers as he arrived at the meeting at the Service and Food Workers' Union. "It's a nice day," he said.

Also there was his political mentor from early days, Judith Tizard, who arrived with the Cunliffe family dog, Daisy.

Nanaia Mahuta was also seen arriving at the meeting this morning. Mahuta, who was Cunliffe's deputy for his failed leadership bid following the 2011 election, did not speak to media. Nor did Ms Coatsworth, general secretary Tim Barnett and secretary Clare Curran.

The battle for control of the party has raged this week as Mr Cunliffe's already meagre caucus support has all but disappeared.

Yesterday Labour's largest affiliated union, the EPMU, warned Mr Cunliffe not to assume it would back him for leader again.

Mr Cunliffe is understood to be convinced he could win another party-wide contest - but the EPMU's response indicates some of those unions are rethinking their position.

Most EPMU delegates voted for Mr Cunliffe in last year's leadership runoff - in which strong support from the party membership and unions carried him over the line.

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However, the general secretary, Bill Newson, said yesterday that did not mean Mr Cunliffe would get that support again.

"I've seen comments that the party membership and unions will line up with David Cunliffe. People shouldn't make assumptions based on what happened last time. Because quite a big thing happened in the meantime and it was called an election."

He said the union would discuss its stance once the picture was clearer, and it was still possible delegates would support Mr Cunliffe if there was a contest.

Mr Cunliffe is understood to be convinced he could win another party-wide contest - but the EPMU's response indicates some of those unions are rethinking their position.

Other unions refused to comment and only the Meat Workers' Union said it remained behind Mr Cunliffe.

National secretary Graham Cooke said the feedback from union members was strongly pro-Cunliffe. "They think he's been given a very raw deal by the right-wing bloggers, Cameron Slater and commentators like Paul Henry and Mike Hosking. Everyone's just been gunning for him."

He said it was up to the party to decide if there was a contest, but if Mr Cunliffe was a contender he would vote for him.

The union vote counts for 20 per cent of the final tally in the leadership contest. The EPMU's size means its delegates' vote is worth 35 per cent of that. The members' and caucus votes are worth 40 per cent each.

Since Tuesday's bruising caucus meeting, Mr Cunliffe has been holed up at his Herne Bay home talking to advisers and popping out for an occasional stroll on the beach, where he was spotted by a Weekend Herald photographer yesterday. Some are understood to have counselled him to stand down and not re-contest the post even if he believes he can win it.

Supporters of Mr Robertson suspect Mr Cunliffe's followers of leaking a breakdown of last year's Labour leadership election results, which showed just how far Mr Robertson was behind Mr Cunliffe in the union and membership votes.