Barnaby Joyce wants his resignation from the Nationals leadership to be a circuit-breaker for the Turnbull government after 16 days of scandal.
The final straw for the deputy prime minister was a West Australian woman's 2011 sexual harassment allegation, which will be referred to police and is the subject of a Nationals investigation.
Mr Joyce, who has been on personal leave this week with his new partner and former staffer Vikki Campion, will officially quit as Nationals leader on Monday and go to the back bench.
"It's incredibly important that there be a circuit-breaker, not just for the parliament but more importantly a circuit-breaker for Vikki, for my unborn child, my daughters and for Nat (Mr Joyce's wife). This has got to stop," he told reporters in Armidale on Friday.
Mr Joyce's troubles have dominated headlines for more than two weeks, overshadowing Prime Minister Malcolm Turnbull's current trip to the United States.
Mr Turnbull says the Liberal-National coalition is "undiminished" despite Mr Joyce's resignation.
"I thank Barnaby for his service as deputy prime minister and in his various ministerial roles in which he has been a fierce advocate for rural and regional Australia," Mr Turnbull said in a statement from Washington.
Acting prime minister Mathias Cormann said the constant stories about Mr Joyce had been a "distraction" to the coalition, but the government now had a good message to sell.
The resignation comes a week after Mr Turnbull told his deputy to "consider his position" after his "shocking error of judgement" - comments the Nationals leader described as "inept".
Mr Joyce has faced repeated questions about jobs given to Ms Campion and his parliamentary expenses.
"Over the last half a month, there has been a litany of allegations. I don't believe any of them have been sustained," Mr Joyce said.
"(But) to give these people in the weatherboard and iron, in those regional and small towns the best opportunity, this current cacophony of issues has to be put aside."
Mr Joyce denies the sexual harassment allegation but told reporters it was the "straw that broke the camel's back".
He told Fairfax Media just two days earlier he planned to ride out the storm but on Friday said it was "not hard at all" to decide to step down.
Mr Joyce did not directly tell Mr Turnbull he was resigning but spoke to Mr Cormann, who said Mr Joyce told him on Friday morning he would step down.
"Barnaby would be the first to recognise that what started as a deeply personal matter spilled over into his professional life and became a distraction for the government," Senator Cormann told reporters.
Veterans Affairs Minister Michael McCormack will take on assistant families minister David Gillespie for the leadership in a party room vote on Monday.
Cabinet minister Matt Canavan described Mr Joyce as a mate who will recover and learn from his mistakes.
"He now has a new partner and a new child to care for and that is much more important than any of his achievements in public life," Senator Canavan said.
Australian Associated Press