New South Wales Health Minister Jillian Skinner has announced she will retire after more than two decades in state politics.

Key points: Veteran MP Jillian Skinner was elected to her North Shore seat in 1994

Veteran MP Jillian Skinner was elected to her North Shore seat in 1994 Her retirement continues a period of upheaval for the NSW Government

Her retirement continues a period of upheaval for the NSW Government As Health Minister, she endured several scandals, particularly 2016

The veteran MP was under intense scrutiny last year over her handling of several scandals in the health system and there was wide speculation she would be dumped when new NSW Premier Gladys Berejiklian announced her new frontbench.

The ABC has been told that at a meeting earlier this week, Ms Skinner threatened to walk away if Ms Berejiklian did not give her the health portfolio.

"That's not for me to comment on today, you can ask her [the Premier]," Ms Skinner said.

A by-election to replace Ms Skinner in her seat of North Shore, where unpopular council amalgamations are a controversial issue, could prove tricky for the Government.

Ms Skinner has held the seat since 1994 and was made shadow health minister the following year. She had held her portfolio for the past six years.

In a statement, Ms Berejiklian said she was deeply disappointed her friend, mentor and colleague was retiring, describing Ms Skinner as a tireless advocate who had delivered major improvements to the health system.

"I admire Gladys enormously. She has always been a close friend whom I have been proud to mentor for many years," Ms Skinner said.

"She has my absolute support and best wishes for a very successful premiership."

Retirement comes after scandal-ridden year

Ms Skinner was under enormous pressure in her portfolio last year.

The State Opposition called for her to be sacked over her response to a hospital error that led to the death of a newborn baby and left another infant with severe disabilities.

Meanwhile, a scandal involving cancer patients who were allegedly given insufficient doses of chemotherapy drugs was the subject of a parliamentary inquiry.

"I am very proud of the work that our clinicians, the staff in the NSW Ministry of Health and the local health districts have accomplished during my time as minister," she said.

NSW president of the Australian Medical Association Professor Brad Frankum said he did not think the minister was to blame "directly" for the problems during her term and described her as an excellent health representative.

"[Ms Skinner] came into the job when there was a significant deficit of trust between government and clinicians in the health system ... she's done a good job of reinstating that trust and we've enjoyed working with her," Dr Frankum said.

Dr Frankum said there were "significant challenges" ahead for Ms Skinner's successor.

"Both in terms of emergency department presentations and elective surgery, the system is under significant strain," he said.

State Labor leader Luke Foley said Ms Skinner's departure confirmed the health system was in a "sorry state".

"We have seen saying for six months that Mrs Skinner should depart the cabinet," he said.

"The waiting times at emergency departments and the waiting times for elective surgery have blown out on this Government's watch."

By-elections could be headache for Government

Ms Skinner's decision continues a changing of the guard in NSW politics, after former Premier Mike Baird's retirement last week.

The looming by-elections could cause a headache for the Berejiklian Government.

The seats up for grabs — North Shore and Manly — have long histories of being held by independents.

ABC election analyst, Antony Green, said this history of independent politicians on the northern Sydney Harbour seats were been rooted in the independent leaning of the local councils, which has declined in the last decade.

"The independent challenge from traditional sources may have diminished," Mr Green told ABC Radio.

"Both seats are very high privileged seats in Sydney — two of the most affluent, highest educated, highest [earning] occupation seats in the entire country."

If Baird's and Skinner's seats go to preselection, Mr Green said it would have more to do with factional in-fighting in the Liberal Party.