Ms Berejikilian announced her decision on Friday morning, after the Independent Commission Against Corruption released a statement saying it was investigating her for potential breaches of public trust.

The investigation, which has prompted Ms Berejiklian to quit parliament as soon as a byelection can be held in her seat, relates to her secret relationship with disgraced former MP Daryl Macguire, which was uncovered by the ICAC last year.

After the announcement on Friday, the government's Parliamentary Secretary for the Hunter Taylor Martin said Ms Berejiklian had a "fundamental impact" on this region during her time as Premier, Treasurer and Minister for the Hunter, particularly through her involvement with Newcastle's CBD revitalisation and the light rail project.

"She has led us through a very difficult period in our state including bushfires, flooding and the coronavirus pandemic," he said.

Labor's Shadow Minister for the Hunter Yasmin Catley said Ms Berejiklian had been right to resign in light of the "serious nature of the allegations" that have been levelled at her.

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"I urge the Liberal Party to resolve the leadership question urgently, so the focus of the government is on the people of NSW, not themselves," she said.

Member for Newcastle Tim Crakanthorp, a Labor MP, acknowledged Ms Berejiklian's leadership, particularly throughout the COVID-19 pandemic, but he said she now joined a "long list of Liberal MPs to resign as a result of an ICAC investigation".

"[It] is something we know all too well in the Hunter," he said. "After 10 long years, this government is falling apart - in total disarray."

Port Stephens MP Kate Washington, a former Shadow Minister for the Hunter for Labor, said the allegations that prompted Ms Berjiklian's decision were "not minor".

"History will judge whether Gladys Berejiklian turned a blind eye to corruption and whether she misused public funds to pork barrel Liberal seats," she said.

"Whoever the next Premier is has a big job ahead of them to rebuild trust in the community."

Independent MP Greg Piper, in a message on social media, thanked Ms Berejiklian for her assistance to his seat of Lake Macquarie during her tenure.

"The news has come as a shock and unfortunately comes at a time when the community is looking for stable government and clear leadership," he wrote.

"I've said previously that the ICAC must be allowed to do its job and we'll now have to wait for the outcome of those investigations."

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