Say one thing about PM John Key - after eight years as Prime Minister he can still deliver a hell of a surprise.

His announcement he was leaving politics rather than staying on to fight for a fourth term was the biggest bombshell he could have delivered.

The first inkling something was up came when his weekly press conference was suddenly brought forward by three hours.

Speculation revolved around a Cabinet reshuffle, or another minister resigning - perhaps even Bill English.

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Then Key took to the stage, his voice uncharacteristically shaky. He began by setting out his own achievements and those of the Government over the past eight years.

It was obvious then he was going to announce he would step down. The question was when.

The answer came soon after - almost immediately. In the Beehive Theatrette there was a palpable moment of shock. It quickly spread around the rest of the political firmament and to the markets - the dollar dropped almost immediately.

Key's driving reason was clear: he wanted to leave on his own terms and while he was still high in the polls.

He spoke repeatedly about watching other international leaders who clinged on for too long.

Earlier this year, he had been with his friend former British PM David Cameron on the day Cameron stepped down following the Brexit vote.

"I've certainly seen lots of leaders leave probably not on their own terms and by any definition I'm leaving on my own terms.

"I really feel leaders tend to stay too long. I look at some of the other leaders around the world who have been on the top of their game ... but I think they sometimes stay too long. And I just felt this was the opportunity for me, on top, to do what very few leaders and Prime Ministers get the chance to do and that is to transition to a new leader."

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He said he had long said he was not a career politician "and I was right."

"One of the things I've always believed in is making room for new talent. And let's be blunt, I've taken the knife to some other people and now I'm taking the knife to myself to allow others to come through and have those opportunities."

His family also clearly loomed large in his decision. He said while it had given them opportunities most did not get, the ten years he had been leader of the National Party had taken a toll on on Bronagh and his children Max and Stephie.

"My daughter Stephie and my son Max have transitioned from teenagers to young adults while coping with an extraordinary level of intrusion and pressure because of their father's job."

"It's a lot of lonely nights for Bronagh and I really feel I owe it to the family to come home a little bit."

The timing of his decision was prompted by the looming election. He had already been asked whether he intended to serve out a full term if he won that term and said he did not feel comfortable answering 'yes' when it was untrue.

"There's no way I could have served out a full fourth term. I think in reality if I'd got there and served six months or 12 months I would have inevitably in the entire campaign had to look down the barrel of the camera and say 'I'm going to stay for three years.' And then I would have misled the public, and deliberately misled them, and it's just not the way I've operated."

He had timed his decision to give his successor and caucus time to recover from the shock and bed in before the next election.

WHAT'S NEXT FOR KEY?

Prime Minister John Key announcing his decision to resign. Photo / Mark Mitchell
Prime Minister John Key announcing his decision to resign. Photo / Mark Mitchell

Key said he did not have any solid future plans but as he had come from the commercial world it was likely he would end up there again, possibly on boards both domestic and international. He would also do hit the speaking circuit internationally.

He and Bronagh would remain living in New Zealand.

He expected life to be "quieter" and again ruled out the possibility of an international position, such as Helen Clark.

He set out his proudest achievements as economic management and leadership through the various natural disasters that beset his reign. He also spoke of trying to help the vulnerable in society throughout the global financial crisis.

"There was a lot of advice to me to pull the rug out from underneath them in 2008 and 2009, and I stood by those people. I know there will always be people who say we did not do enough, but I think we did everything we could [in] the circumstances we had."

Key also set out his regrets, saying he would have liked to have seen the Trans Pacific Partnership a flag change.

TIMELINE OF A DECISION

John Key answering questions from the media. Photo / Bloomberg
John Key answering questions from the media. Photo / Bloomberg

Key said he had told his Cabinet colleagues from 8am this morning, contacting them individually.

It came after he mulled it over throughout the year, finally making up his mind after returning from the United Nations in New York in September.

Other than family, Deputy Prime Minister Bill English was the only one he brought into the loop at that point.

He had not told others "because it is a very difficult thing to burden people with."

Key said he had wanted to leave on his own terms, but that had not made it any easier breaking the news to his colleagues and staff.

WHAT NEXT FOR NATIONAL?

2014: Prime Minister John Key during his speech to the National Party election-night event at the Viaduct Events Centre in Auckland. Photo / Mark Mitchell
2014: Prime Minister John Key during his speech to the National Party election-night event at the Viaduct Events Centre in Auckland. Photo / Mark Mitchell

Key has thrown his support behind Bill English to take over as Prime Minister and National leader when National's caucus meets to vote next week.

English led the party to a historic low result in 2002 and Key said English had genuinely believed he would not get the chance to lead again.

"He was probably more shocked when I spoke to him in September than a lot of people. Personally I think he'll be a fine PM and if not him then it will be someone else."

While it was possible there would be a contest, he had a coded message for his own caucus not to let the leadership contest tear the caucus apart.

"What the country wants is strong and stable leadership and I think if we can transition to a new leadership team efficiently and with unity and dignity, then I think we can provide that."

He would offer his help until he left next year within six months of the election to avoid a byelection in Helensville.

He said often leaders stayed for too long and got rolled, staying to "whiteant" their successor but his decision to go meant he would not be "disgruntled and unhappy" on the backbenches.

Asked if his decision made it difficult for National to get a fourth term in government, Key acknowledged his personal 'brand' was a factor.

"That's been a factor which has been helpful, I don't think there's any doubt about that.

But equally I think people have seen what the Government has delivered and I think in the end people vote on the issues that really matter: the economy, law and order and health and education."

However he later indicated how hard that would be - saying his decision to leave while National was so high in the polls might mean it could pull off something no other political party had done in recent times - change leaders and still win a fourth term.

He said he would vote for his deputy Bill English when National's caucus met to vote on his replacement on December 12 if English wanted the role.

Key said National's new leader - and Prime Minister for a year - would inevitably do things differently "but that's a healthy thing."

He believed he left at a point when National was polling high enough and had a strong enough record for his decision not to completely scupper the chances of a fourth term.