Long-serving Federal Labor MP Mike Kelly has ended months of speculation by making the "gut-wrenching" decision to resign from Parliament.

Key points: Mike Kelly says he hopes his resignation will bring embattled communities in Eden-Monaro into the spotlight

Mike Kelly says he hopes his resignation will bring embattled communities in Eden-Monaro into the spotlight High-profile Coalition members are jostling to be able to contest the seat, which is likely to be retained by Labor

High-profile Coalition members are jostling to be able to contest the seat, which is likely to be retained by Labor Dr Kelly says health issues have forced his hand, but says he intends to "make a difference" with whatever he does next

The 60-year-old held back tears as he announced his resignation this morning in a move that will trigger a by-election in the New South Wales seat of Eden-Monaro.

Dr Kelly has undergone 10 medical procedures over the past six months to address damage to his renal system, caused by severe dehydration during military tours in Iraq, Somalia and East Timor.

"I don't believe I can continue to do the job to the extent — and with the commitment and the physical demand — that I would want to," he said.

"I would feel I was letting the community down if I wasn't able to put that commitment in.

"This community deserves better than that, particularly now."

Dr Kelly said he also wants to better support his wife Rachelle, who is also experiencing health issues.

The former army colonel, who was elected in 2007 to the then-bellwether seat, said the decision to stand down had "broken his heart" and was "gut wrenching".

"It has been the greatest privilege of my life to represent this community," he said.

"To have to lay down that torch is very emotionally charged and distressing."

Federal Labor leader Anthony Albanese said Dr Kelly's resignation was a loss for the party and for the electorate.

He said Federal Parliament would be "poorer" without him.

"Mike Kelly is an extraordinary Australian and he has brought a great deal of dignity, talent, capacity and commitment to this parliament," he said.

Mr Albanese said Dr Kelly had downplayed the gravity of his medical procedures in the last six months, saying despite his health he remained committed to his constituents.

"Every time I've spoken to him even on the days he's about to undergo a procedure he has focused on the people of the electorate of Eden-Monaro," Mr Albanese said.

"His work he did during the bushfire crisis was quite extraordinary, the commitment that he showed."

Dr Kelly is battling chronic health problems and has undergone numerous medical procedures over the past six months. ( Supplied: Mike Kelly )

First by-election of 46th Parliament

Dr Kelly said he hoped the timing of his decision would benefit his constituents.

"A by-election will put Eden-Monaro squarely at the front and centre of the national debate," he said.

"No region has suffered more through the double whammy of climate change, bushfires and now coronavirus than Eden-Monaro.

"By falling on my sword now I think I'm doing the best for the region in making sure we get the commitments that we need."

Kristy McBain could be the woman to succeed Mike Kelly. ( ABC South East NSW: Claire Wheaton )

Labor is expected to endorse Bega mayor Kristy McBain to contest the by-election.

If history is anything to go by, she should hold onto the seat — no government has won a seat from an opposition at a by-election in more than 100 years.

Labor Leader Anthony Albanese is understood to have personally endorsed Ms McBain.

Dr Kelly said it was "high time" the electorate was represented by a woman, but would not be drawn to comment on any one person in particular.

"After 119 years, let's see what we can do to achieve a female member for Eden-Monaro," he said.

"That would be wonderful."

PM admits underdog status

On Wednesday, Prime Minister Scott Morrison indicated the battle for Eden Monaro would be a three-cornered contest.

"The Liberal Party will contest the seat, as I'm sure the National Party will," he said.

"But that doesn't change the history, which would mean that it would be a 1 in a 100-year event for a government to take a seat from the opposition.

"That would be a rather extraordinary outcome."

John Barilaro says that "he is not ruling anything out" with respect to running for Eden-Monaro. ( ABC News )

Despite the odds, the prospect of a by-election has attracted a field of high-profile potential Coalition candidates, who have been jockeying behind the scenes for preselection.

NSW Deputy Premier and Nationals MP John Barilaro is understood to be interested in the seat, as well as NSW Transport Minister Andrew Constance and Liberal Senator Jim Molan.

Under parliamentary rules, there is no time limit for a by-election to be held, and Dr Kelly said the coronavirus pandemic would slow the process down.

"I believe that we will be able to have a by-election, with proper precautions, without too much difficultly," he said.

"But it's likely to be delayed."

Highs and lows

Dr Kelly said he was proud of his achievements in Parliament, where he had made friends on all sides of the chamber.

"I'm proud of the improvements to primary healthcare in the region, the establishment of the South East Regional Hospital, as well as the NDIS," he said.

Dr Kelly in Iraq. ( Supplied: Mike Kelly )

"I'm really proud of my role in helping to establish the Australian Civil Military Centre — it played a massive role in helping Australia secure its place on the United Nations Security Council in 2013."

The MP was first asked to run by former Prime Minister Kevin Rudd, who took the unusual step of naming Dr Kelly, just before the 2013 election, as the future defence minister in a re-elected Labor government.

But Labor lost the election and Dr Kelly's promotion never materialised.

"Those things were never to be and I'm not going to chew my spleen over not having that opportunity, or let it ruin my life," Dr Kelly said.

He said the days of Labor's leadership turmoil were his worst days in Parliament.

"I didn't expect to have to deal with that internally and I found it a big challenge," he said.

"The biggest regret I have is what happened in that process, because it undermined achievements that we needed to score in relation to the climate change policy, in particular."

But he said he felt politics was in a much better state nowadays.

"Both the Labor and Liberal Party have changed their leadership processes and that's a good thing," he said.

"I'm hopeful that [as a result of COVID-19] we've forged a closer spirit of national cooperation going forward, like world wars have done for us in the past," he said.

Mike Kelly in Parliament on May 10, 2018. ( ABC News: Matt Roberts )

Life after politics

Dr Kelly said he was not sure what he would do next, but said he was keen to work in the technology sphere.

"I'm going to focus on getting my hands dirty and getting stuff done," he said.

"I am focused now on going forward and tackling the big challenges and putting body and soul into that in a way that my health will allow.

"I can continue to make a contribution and to make a difference and that's what I intend to do.

"I know a lot of politicians say that their families are conscripts in this situation, but that would be an insult to my family.

"We have sat around the kitchen table and voted on every decision we would take and they've been willing servants of the nation.

"They've endured it willingly, but it's time now to re-prioritise and be more supportive of them."