Labor senator Sam Dastyari will formally resign from parliament next week, making way for former NSW premier Kristina Keneally as his likely successor.
Senator Dastyari signalled on December 12 he would resign in the wake of scrutiny over his dealings with a Chinese businessman and political donor.
However he has continued to draw his senatorial salary since then while waiting on the ALP processes to replace him.
Senator Dastyari told AAP on Thursday he would deliver his resignation to the Senate President next week.
"I'm keeping my next options open," he added.
Ms Keneally, who lost the December by-election in the Sydney seat of Bennelong, will face a contest from two other former NSW state MPs, Virginia Judge and Barry Collier, but is expected to get the nod from the party's administrative committee on February 2.
She would then need the endorsement of a joint sitting of the NSW parliament before being sworn in to the Senate.
Ms Keneally said she would be speaking with rank-and-file members of the NSW ALP and affiliated trade unions over coming days to seek their support.
"I respect the ALP's nomination process and will work within it to earn the backing of our party's members and the affiliated trade unions."
Labor leader Bill Shorten told reporters in Melbourne he was a fan of Ms Keneally but the party should be left to conclude its processes.
"I think she has a lot to offer national politics," he said.
"But ... there is a process that New South Wales Labor will follow and at the conclusion of that process we will have a candidate for senator and I think Kristina will do a very good job if she is successful," Mr Shorten said.
He declined to criticise Senator Dastyari, saying it was not unusual for senators to take their time to "resolve their matters" before formally stepping down.
Former prime minister Tony Abbott told radio 2GB Labor had a habit of "recycling failures".
He said Senator Dastyari should have left parliament earlier.
