Reading from a prepared statement late on Thursday afternoon, Mr Foley said he had already engaged lawyers and would now begin defamation proceedings in the Federal Court.

"The allegations against me today made public by the ABC are false," Mr Foley said.

"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 said he would remain in state Parliament as the MP for Auburn.

Maroubra MP Michael Daley is favourite to be elected Labor leader, with Penny Sharpe will be his deputy. 

However late on Thursday Kogarah MP Chris Minns was said to be "sounding out" colleagues and is expected to also nominate for the leadership.

Mr Foley's resignation came hours after ABC journalist Ashleigh Raper outlined her version of events of an incident allegedly involving Mr Foley at a CBD bar in late November 2016.

Ms Raper, who has declined to comment since Corrections Minister David Elliott first raised the allegations against Mr Foley under parliamentary privilege, said she decided to break her silence after recent conversations with the Opposition Leader.

The statement had been released after Ms Raper said Mr Foley reneged on a promise he made during a phone conversation with her on Sunday to resign as Opposition Leader by Wednesday.

During that conversation, Ms Raper alleges Mr Foley told her: "I’m not a groper, I’m just a drunk idiot."

Her statement said: "This is a position I never wanted to be in and a statement I never intended to make.

"But I think the time has come for my voice to be heard."

Ms Raper said the "escalation of the public debate, including in state and federal parliament despite my expressed wish to neither comment nor complain, and the likelihood of ongoing media and political interest" prompted her to speak

Her statement said: "This is what happened on that night.

"The party moved from Parliament House to Martin Place Bar after a number of hours. Later in the evening, Luke Foley approached a group of people, including me, to say goodnight. 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.

"I completely froze."

Read more: Maitland MP Jenny Aitchison weighs in on Luke Foley allegations

She said Sean Nicholls, who was then the state political editor at The Sydney Morning Herald and is now an ABC journalist, witnessed the incident.

Ms Raper said Mr Foley then left the bar and she discussed what had happened with Mr Nicholls.

"As shaken as I was, I decided not to take any action and asked Sean to keep the events in the strictest confidence. He has honoured that," her statement says.

She said there were several reasons for not wanting to make a complaint.

"It is clear to me that a woman who is the subject of such behaviour is often the person who suffers once a complaint is made," Ms Raper said.

"I cherished my position as a state political reporter and feared that would be lost.

"I also feared the negative impact the publicity could have on me personally and on my young family.

"This impact is now being felt profoundly."

Ms Raper said she had a 19-minute telephone conversation with Mr Foley on Sunday during which he said to her he was "full of remorse for his behaviour" at the Christmas function.

"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," she said.

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

She said he promised to resign on either Monday or Wednesday, but not Tuesday because he "didn't want to be accused of burying the story" on Melbourne Cup Day.

But Mr Foley then called her on Tuesday, she said. During the call, he repeated his apology but said he would not be resigning as Opposition Leader, based on legal advice, she said.

Mr Foley’s caucus colleagues have maintained that they would not move on him as long as he continued to deny the allegation and Ms Raper did not make a statement.

Blue Mountains MP Trish Doyle became the first Labor MP to publicly call on Mr Foley to resign on Thursday, and threatened to call a leadership spill if he refused to do so.

"In my view Mr Foley's position is untenable and he must resign today," Ms Doyle said in a statement.

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

Mr Elliott has remained silent about his role in the harassment scandal after he was criticised for "political point scoring" by Ms Raper.

NSW Premier Gladys Berejiklian and Mr Elliott refused to comment on Thursday. In her statement, Ms Raper highlighted Mr Elliott's role in bringing the matter into the public spotlight, which she said was done without her consent.

Comment: Again, a woman cleans up the mess

"David Elliott raised the matter in the New South Wales Parliament last month, putting the incident in the public domain," Ms Raper said in the statement.

"The matter then became a state and federal political issue and resulted in intense media attention.

"This occurred without my involvement or consent."

Mr Elliott raised the allegation in the NSW Legislative Assembly in October, where he accused Mr Foley of being involved in an incident where he had "a little bit too much to drink at a party and harassed an ABC journalist".

Mr Elliott did not name Ms Raper. Mr Foley held a press conference later that month, contending “I’ve said what I want to say on this which is I staunchly deny what Mr Elliott has said.” 

The following week Liberal senator Eric Abetz asked ABC acting managing director David Anderson about the allegations in a Senate estimates hearing, prompting the public broadcaster to launch an investigation.

Ms Raper cited the "escalation of the public debate, including in state and federal parliament, despite my expressed wish to neither comment nor complain," as a key reason for her decision to detail her version of events in the statement on Thursday. 

She added that "situations like mine should not be discussed in parliament for the sake of political point scoring. And I want it to stop.""

Ms Raper concluded her statement by calling for privacy.

"I want to get on with my life," she said.