Prime Minister John Key says he's glad he won't be going out angry, when he hands in his formal resignation next week.

Mr Key announced his resignation at a news conference in Parliament on Monday afternoon, saying he can "die happy" having had the privilege of running the nation.

He told Duncan Garner on RadioLIVE it was an "immensely difficult" decision to make, but he's happy at the point he's at.

"I'm amazingly grateful to the New Zealand public for the way they've treated me," he said.

"I'm so pleased I'm going to go out grateful to them - because so many leaders leave a little bit angry and I'm not going to do that."

The new Prime Minister and National Party leader will be decided at a Caucus meeting on December 12. Mr Key will remain MP for Helensville to avoid a "costly" by-election, but at some point before the next election, says he'll step down as an MP.

It'll end Mr Key's chances at a historic fourth term - something that, as early as January this year, he indicated he would be seeking at next year's election.

But by September, he was already reluctant to run again.

"During the year [wife Bronagh Key and I] were mulling it over a little bit, we went to Hawaii in the middle of the year and had quite a long chat about it," he told Garner.

"I really thought this was probably the right call at the end of the year, which marks my decade as being the [National Party] leader and eight years as prime minister.

"When we went off to the Security Council and came back in September I really just thought, 'Wow, it's been a remarkable ride but I think that's about it'."

Mr Key rejected rumours he was resigning due to ill health, telling Garner: "The health is 100 percent tickety-boo."

"The doctor thinks I'm more than fighting fit," he said.

Mr Key spent much of his announcement recounting his and his Government's achievements over the past eight years.

He cited pressure on his family as one of the reasons for stepping down.

"Throughout these years I've given everything to this job, the job that I cherish and for the country I love."

Mr Key choked up when he began talking about the cost of the job on his family.

"All of this has come as quite some sacrifice for the people who are dearest to me - my family. For my wife Bronagh, there have been many nights where she was alone, many occasions that were important to her that I simply couldn't attend."

As for his future, Mr Key says for him "and the National Party, this is a good time to go".

"I don't have any plans. I'm a commercial guy - I'm not looking for any postings overseas.

"It'll be a slightly quieter life."

It could involve being on a number of company boards, or international speaking engagements.

He says he'll back whoever the rest of the caucus picks as his replacement.

"Whoever the caucus selects will have my unwavering support. If Bill English puts his name forward, I will vote for him."

Mr Key has put his weight behind Mr English to take over as leader.

"What I didn't want is ambiguity on my part... secondly, I've worked with Bill for 10 years. We've had a great working relationship, and to me it would feel a bit odd if I didn't back the guy I've been working alongside for a decade."

Mr English was previously leader of National in 2002 where the party lost the election, but Mr Key says things are "different" now.

Mr Key has held the Helensville electorate since 2002, and was elected unopposed as the party's leader in 2006. He has consistently been New Zealand's most preferred Prime Minister during his reign.

"It's been a remarkable journey. It's been an incredible experience and it's been a privilege. I'm going to die happy.

"A good leader knows when it's time to go, and it's time to go.

"I'll be blunt - I've taken the knife to some other people, and now I've taken the knife to myself."

Mr Key says he told Cabinet members individually, which was met with "a bit of surprise and shock", but also with support.

"They can understand it."

Newshub.