One of Bill Shorten's closest advisers has quit over an "unacceptable" blackface costume controversy.

Steve Michelson - responsible for the Opposition Leader's stakeholder relations - resigned "following a discussion with Mr Shorten last week", a spokesman for Mr Shorten's office confirmed on Monday.

Steve Michelson has quit Bill Shorten's office following the emergence of a picture of him with blackface.

The photo - which shows Mr Michelson in black facepaint and a curly black-haired wig - dates back to a 2007 fancy dress party but started circulating in Labor circles in recent weeks.

"This conduct - which occurred many years ago - is clearly unacceptable, and out of character for Mr Michelson, who was a valued and diligent staff member," a spokesman for Mr Shorten said.