THE Hunter’s political landscape has taken another dramatic turn with Newcastle lord mayor Jeff McCloy resigning.

The lord mayor sent an official letter of resignation to Newcastle council general manager Ken Gouldthorp on Sunday after a week of intense pressure produced by the state corruption inquiry.

His resignation follows that of state Liberal MPs Tim Owen and Andrew Cornwell, and a move to the crossbenches by Swansea MP Garry Edwards over donations made to their 2011 election campaigns by the millionaire developer.

The Newcastle Herald can reveal that Mr McCloy has decided not to step aside from his role, but resign entirely, effective immediately, meaning the city’s residents will now be heading to the polls three times in the next seven months.

In his letter of resignation, Mr McCloy said the controversy surrounding donations he made to the 2011 election campaign ‘‘may  affect the proper functioning’’ of the council.

‘‘I believe that I am leaving the city in much better shape financially and physically than it was when I started,’’ he said.

‘‘I would like to personally thank the general manager and staff of Newcastle City Council and the thousands of Novocastrians who supported change in our city.

‘‘It has been a privilege serving the people of Newcastle, but now I will leave this to others.

‘‘I encourage the elected council to continue focusing on local issues of significance for the Newcastle community and the progression of our city,’’ he said.

The move means that the city’s deputy lord mayor, Liberal Brad Luke, will take over the mayoral reins until a byelection is held.

The Local Government Act requires that a fresh lord mayoral election be held because the position has been vacated more than 18months out from the next scheduled council election. Local Government Minister Paul Toole will be required to stage the election within three months.

Mr  McCloy’s move also follows news on Friday that Minister Toole was seeking legal avenues to remove the lord mayor after he admitted breaking political donations laws when he appeared before the Independent Commission Against Corruption on Thursday.

Then, Mr McCloy admitted to donating $9975 to the campaign of Newcastle Liberal Tim Owen, and $10,000 in cash to Charlestown Liberal Andrew Cornwell.

He also admitted to taking ‘‘about $1500’’ from his wallet and giving it to then-Liberal candidate for Swansea Garry Edwards, and writing a further cheque for $10,000 which was allegedly used to pay the wages of Liberal staffers running the Newcastle campaign.

Premier Mike Baird had also called on Mr McCloy to ‘‘do the honourable thing and resign’’ or face being removed from office by the beginning of next month.

General manager Ken Gouldthorp released a statement on Monday confirming it would be business as usual but the city would miss Mr McCloy's leadership.

"Our focus remains on supporting the local community with the full range of council services," he said. 

Mr McCloy spent Sunday with his family and said he would not be making any further comment because the corruption inquiry was still proceeding, and he wanted the council to be spared from any more political turmoil.

Mr McCloy is due to travel overseas tomorrow on a long-planned two-week  family holiday.

The Herald understands that Mr McCloy will continue with a High Court bid to overturn the laws which prevent him being a political donor.

TO THE GENERAL MANAGER OF NEWCASTLE CITY COUNCIL & TO THE PEOPLE OF NEWCASTLE

The controversy surrounding donations I made in the lead-up to the 2011 NSW elections may affect the proper functioning of Newcastle City Council.

I, therefore, tender my resignation as lord mayor of Newcastle, effective immediately.

I believe that I am leaving the city in much better shape financially and physically than it was when I started.

I would like to personally thank the general manager and staff of Newcastle City Council and the thousands of Novocastrians who supported change in our city.

It has been a privilege serving the people of Newcastle, but now I will leave this to others.

I encourage the elected council to continue focusing on local issues of significance for the Newcastle community and the progression of the city.

Yours Sincerely

Jeff McCloy