Former NSW opposition leader Luke Foley has backed down on his threat to sue the ABC over the sexual harassment allegations aired by journalist Ashleigh Raper that led to his political downfall.

When Mr Foley resigned on November 8, he gave a defiant press conference denying he had put his hand down Ms Raper's dress at a Christmas party and threatening to sue the ABC for defamation.

But he has now issued a statement confirming he will not proceed with legal action.

"It's in no-one's interests for the matter to be the subject of long-running court proceedings and I won't put everyone through this," Mr Foley said.

The ABC understands that since Mr Foley's resignation, senior Labor figures have counselled him not to go ahead with the legal proceedings, saying it would be both personally and politically damaging.

Mr Foley first came under political pressure over the allegations in mid-October when NSW Corrections Minister David Elliot used parliamentary privilege to accuse Mr Foley of "having a little bit too much to drink at a party" and harassing an ABC journalist.

Federal Liberal senator Eric Abetz then pursued the allegations by putting a series of questions to the ABC in Senate Estimates.

Ashleigh Raper is an experienced journalist in the ABC's Sydney newsroom. ( ABC News )

Ms Raper released a statement detailing the allegations on November 8, saying she had not wanted to speak about the incident but had been forced to because it had been put in the public domain.

Mr Foley resigned within hours.

At the time he said "the allegations against me today, made public by the ABC, are false".

"I've retained solicitors and senior counsel to advise on the immediate commencement of defamation proceedings in the Federal Court of Australia."

The man who replaced Mr Foley as opposition leader, Michael Daley, was among several senior Labor figures who swiftly came out publicly to urge Mr Foley not to sue.

Mr Daley said he believed Ms Raper and also indicated he wanted to have Mr Foley expelled from the Labor Party.

But he later backed down on that threat, saying: "Luke Foley also has a wife and kids and I don't want to grind him into dust."

Mr Foley announced earlier this month he would not recontest his seat of Auburn at the March state election, which is now less than four months away.

Senior Labor Party sources have welcomed Mr Foley's decision not to sue, saying it would have been a damaging distraction in the lead up to the campaign.