An influential Australian opposition lawmaker under fire over his close links to wealthy Chinese political donors has announced he is quitting the Senate for the good of his party as the government moves against foreign interference in politics.

Sam Dastyari announced on Tuesday that he would quit as a senator for the center-left Labor Party before Parliament next sits in February. Cabinet Minister Peter Dutton had criticized Dastyari for his links to China.

Dastyari has been at the center of government complaints of foreign interference in Australian politics, accusation that have raised the ire of Beijing.

Labor has accused the government of tapping into community "China-phobia" to attack Dastyari.

The government has announced that Australia will ban foreign interference in its politics either through espionage or financial donations.