Updated March 26, 2019 16:57:53

Photo: Michael Daley said he wanted to put the interests of the party first. (ABC News)

Former NSW Opposition Leader Michael Daley has pulled out of the race for the party's leadership, after a disappointing state election result.

Mr Daley yesterday announced he would stand aside, but insisted he would still contest the leadership when a ballot was held after the upcoming federal election.

In a brief statement, the Maroubra MP today announced he made the decision not to contest the leadership after consulting colleagues and his family.

He said he did not wish to be "a distraction" during the looming federal election campaign and that the NSW party required "clear air" for the selection of a new leader.

"I have always put the interests of the party first and in making this decision, continue to do so," he said.

Mr Daley said he intended to remain the Member for Maroubra but would be taking leave for the next few weeks to spend time with his family.

Penny Sharpe was yesterday announced as the interim leader.

Under Labor rules, selecting a new leader will require a vote of the party's rank-and-file membership, as well as MPs.

That process will start only once the federal election has been held.

When he announced he was stepping aside, Mr Daley said he didn't want to have an "unfair advantage" prior to nominating for the leadership role.

He was the Opposition Leader for only 19 weeks after replacing Luke Foley last year.

More to come

Topics: politics-and-government, government-and-politics, sydney-2000

First posted March 26, 2019 16:45:03