NSW Opposition Leader Luke Foley has resigned after an ABC journalist accused him of groping her at a Christmas party in 2016, allegations he says are false.

At a media conference at NSW Parliament yesterday, a defiant Mr Foley said he had hired lawyers to launch legal action after the ABC published an explosive statement from journalist Ashleigh Raper.

"This first thing I'd like to say, the allegations made against me today made public by the ABC are false," Mr Foley said.

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

"However, I can't fight to clear my name and fight an election at the same time.

"It's just not possible to do both.

"Therefore, I'm resigning the leadership of the Labor Party effective today.

"This will enable a new leader to give his or her full attention to the task of defeating the Liberal-National government."

Mr Foley will remain on the backbench as the member for Auburn. (AAP)

ABC reporter Ashleigh Raper says Mr Foley put his hand through a gap in her dress. (AAP)

Anti-violence against women organisation White Ribbon stripped Mr Foley of his ambassadorship within hours of his resignation.

Mr Foley said he would remain as the member for Auburn and return to the backbench.

An emergency caucus meeting is expected to be held tomorrow to select Mr Foley's replacement ahead of the March election.

Deputy leader Michael Daley and frontbencher Chris Minns are the frontrunners to take over the role.

Last night, ABC news director Gaven Morris backed Raper's statement.

In her statement released by the ABC yesterday, Raper said she was going public for the first time "to set the record straight".

Raper said the alleged incident occurred at a Sydney CBD bar following a Christmas party in November 2016 for reporters and political staffers.

"Later in the evening, Luke Foley approached a group of people, including me, to say goodnight," Raper said.

"He stood next to me.

"He put his hand through a gap in the back of my dress and inside my underpants.

"He rested his hand on my buttocks.

Mr Foley spoke to the media yesterday morning before the ABC's bombshell statement was posted. (AAP)

"I completely froze."

Raper said then-Sydney Morning Herald reporter and current ABC colleague Sean Nicholls had witnessed the incident.

Raper said in her statement that she had spoken to Mr Foley, 48, on the phone for 19 minutes on Sunday and the NSW Labor leader told her he intended to resign this week.

"He told me that he had wanted to talk to me about that night on many occasions over the past two years because, while he was drunk and couldn't remember all the details of the night, he knew he did something to offend me," Raper said.

"He apologised again and told me, 'I'm not a philanderer, I'm not a groper, I'm just a drunk idiot'."

In a second call on Tuesday, Raper said Mr Foley told her he intended to remain in his position after seeking legal advice.

Yesterday, Labor MP Trish Doyle said Mr Foley's position was "untenable" and that she would call a leadership spill if he failed to resign.

"The allegations against Luke Foley are serious and they are unacceptable," the Blue Mountains MP said in a statement.

"I am concerned that this issue has drawn out and caused such distress and anguish for the journalist at the centre of it.

"In my view, Mr Foley's position is untenable and he must resign today."

Prime Minister Scott Morrison said the allegations against Mr Foley were "shocking" and "disturbing".

"I think they're shocking allegations and you know there'll be a process here," Mr Morrison told reporters in Townsville.

"What's been presented - it's very, very disturbing, it's quite shocking."

Federal Labor leader Bill Shorten declined to comment on the allegations when asked at a press conference in Western Australia.

"I'm not going to start commenting on serious matters like that without getting the facts, I appreciate it's a very serious matter but I'm unable to assist you further and it's an issue for Mr Foley," Mr Shorten said.

The claims were first aired earlier this month when Corrections Minister David Elliott used parliamentary privilege to accuse Mr Foley of harassing an unnamed ABC reporter.

At the time, Mr Foley challenged Mr Elliott to make the claims outside of parliament and suggested he would sue if he did so.

"There is no complaint, all there is is a smear under parliamentary privilege in the coward's castle by Mr Elliott," Mr Foley said last week.

Luke Foley with wife Edel McKenna in March 2015. (AAP)

"I've repeatedly challenged Mr Elliott to repeat his smear outside the coward's castle, of course he hasn't and he won't."

Mr Foley entered parliament in 2010 and took over as Opposition Leader in January 2015, just months before Labor's election loss to Mike Baird and the Liberal Party.

He has three children with wife Edel McKenna.

Raper said she had feared for her position as state political reporter at the time of the alleged incident but had three reasons for yesterday's public statement.

"First, women should be able to go about their professional lives and socialise without being subject to this sort of behaviour," she said.

"And I want it to stop.

"Second, situations like mine should not be discussed in parliament for the sake of political point scoring.

"And I want it to stop.

"Third, I want to get on with my life."

Just yesterday morning, Mr Foley was in Strathfield announcing Labor's election commitments on public transport.

The ABC said its first priority was Raper's welfare.

"The ABC considers it extremely unfortunate that media and public pressure has been applied to Ms Raper during these past months and caused her to speak publicly on an issue she did not wish to pursue or to comment on," the broadcaster said in a statement.