'Destabilised' McKay quits as Labor leader

The party may now face a bruising and lengthy leadership contest if more than one candidate puts up their hand for the top job.

Ms McKay's allies are blaming her fall on bullying, and the former opposition leader is alleging destabilisation from within.

The 51-year-old, who has been opposition leader since mid-2019, on Friday said she was quitting to unite the party despite retaining the support of the majority of her parliamentary colleagues.

"If a ballot was held today I can tell you I would win," she told reporters.

"But it is clear that although I was elected in a democratic ballot there are those within our party that have never accepted the outcome of that process.

"There has to be a future where there is no destabilising of the party's leader from within."

A supporter of Ms McKay said the leader had endured constant backgrounding and white-anting.

"The question is now whether you give in to the bullies," they said.

Ms McKay's likely replacement, Chris Minns, has not yet announced his intention to run but thanked the former leader for putting Labor first.

"I intend to continue talking to my colleagues in the Labor caucus, Party and movement about how we unify and win the confidence of the people of NSW," he said in a statement posted to Twitter.

Mr Minns' ascension to the leadership is far from a done deal.

Ex-opposition leader Michael Daley is also considering a run, and was among a series of Labor MPs who publicly expressed disgust over Ms McKay's demise.

The member for Maroubra lauded her as a person of great integrity, and pointed out she had been democratically elected overwhelmingly by both the membership and the caucus.

"It's a shameful thing she felt forced to go," he said a statement.

Shadow Minister for Women Trish Doyle said the saga had "momentarily scuttled" the party's attempts to be a strong and thoughtful opposition.

"Sadly, egos who'd rather trash good leadership than not be in power do not care what gets broken along the way," she said in a statement.

Ms McKay had this week repeatedly pledged to stay in the top job and help NSW Labor rebuild after a disappointing performance in last weekend's Upper Hunter by-election, when Labor's primary vote slipped to 21 per cent.

A bust-up over a 'dirt file' about Mr Minns, allegedly circulated out of deputy Labor leader Yasmin Catley's office, placed additional pressure on Ms McKay's leadership.

Ms McKay insisted neither she nor Ms Catley knew anything about the dirt file, and that the staffer who distributed it has been removed.

Shadow treasurer Walt Secord blamed the dirt file for his resignation on Tuesday. Mr Minns' stood down soon after, declaring his position "untenable".

Ms Catley resigned from the frontbench and as Labor deputy leader on Friday.

She said the last few weeks had been "incredibly difficult". Firing her staffer was one of the hardest moments of her working life, she said.

"I deeply regret the events of the last few days and their impact on my colleagues. Personal attacks on colleagues are not the Labor way," Ms Catley said in a statement.

Mr Secord paid tribute to Ms McKay's hard work as leader and called on the party to unite.

Adam Searle, who leads the opposition in the upper house, will be acting Labor leader.

Mr Minns was Ms McKay's rival in the 2019 vote which saw her take the reins.

She prevailed in a leadership election contest involving the party's rank-and-file, beating Mr Minns 29 to 21 in caucus and claiming 63 per cent of Labor members' votes.

Mr Minns never publicly challenged Ms McKay for the leadership.

On Friday, Ms McKay called on the party to accept the result of any ballot resulting from her resignation, adding she would remain on the back bench as MP for Strathfield.

"We must all support the outcome, we must all support the new leader, and we have to work to win government in 2023," she said.

Whoever prevails will become the fourth NSW Labor in less than three years, following Luke Foley, Mr Daley and Ms McKay.

Australian Associated Press