Daley stood aside on Monday until after the federal election, but has now said he will not contest top job

This article is more than 1 year old

This article is more than 1 year old

Just 24 hours after saying he would be a contender in the ballot as leader of the New South Wales opposition in eight weeks’ time, Labor’s Michael Daley has announced he won’t be seeking the job again.

Daley’s withdrawal from the race comes as the NSW ALP tries to prevent Daley’s racially charged comments during the state campaign from infecting the federal campaign.

In the last week of the campaign, a video emerged of Daley at a politics in the pub session in Wentworth Falls, west of Sydney, in which he said Asians with PhDs were taking “our kids’” jobs. He later apologised and said he had chosen his words badly but was trying to make a point about housing affordability in Sydney.

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Labor lost last Saturday’s election, and gained only one seat, after initially showing strong gains in the opinion polls.

NSW Labor first delayed the party’s leadership ballot for eight weeks – until after the federal election campaign – after the federal Labor leader, Bill Shorten, expressed concerns about how Daley’s gaffe might play out during the looming national vote.

Daley insisted on Monday evening he would be a contender for the state leader job but is believed to have come under further pressure from Shorten’s office to pull out altogether.

Earlier in the day, Shorten said: “I think the federal election will be decided on federal issues. But let’s not shirk the point; it wasn’t appropriate, they shouldn’t have been said.”

Late on Tuesday, Daley issued a short statement saying he would not be a candidate in the ballot for leader of the state party.

In a short statement, Daley said he had made the decision “after consulting colleagues and his family” and “he did not wish to be a distraction for the federal campaign”.

He said he wanted to give the state party “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.

His deputy, Penny Sharpe, will be interim leader until the ballot can be held but she cannot stand as she is in the state upper house.

The announcement leaves the field clear for a new generation to take the leadership. The water spokesman, Chris Minns, has already put his hand up. The shadow treasurer, Ryan Park, and the spokeswoman on transport, Jodi Mckay, are also likely to emerge as contenders.

Daley said he intended to remain the member for Maroubra and would be taking leave for a few weeks.