Mr Latham, 43, suffered a bout of pancreatitis at Christmas and said he was quitting to "look after my health".

Mr Latham, who led the party for just over a year, had been criticised for Labor's general election drubbing in October, and for his leadership style.

Labor's new leader will be decided next week, with former leader Kim Beazley tipped for the post.

Mr Latham has been on leave since he was hit by a second bout of pancreatitis in December.

In a statement on Tuesday he said: "In recent days, I have been able to get away to rest and recover and talk to my family about our priorities for the future. Our conclusion is that I should look after my health and pursue a normal life outside politics.

"Therefore I have decided to resign both as Labor leader and member for Werriwa," he said.

Mr Latham was criticised recently for being slow to comment on the Indian Ocean tsunami, which hit while he was on holiday.

He will be best remembered for his opposition to the war in Iraq, and for occasional outbursts of vulgar language.

He told parliament last year that George W Bush was "the most incompetent and dangerous president in living memory".

He also achieved notoriety after a brawl in which he broke a taxi driver's arm in a row over a fare.

A ballot to succeed him as Labor leader will be held on 28 January.