Labor has preselected former NSW minister Diane Beamer for the seat of Lindsay to replace the spurned incumbent MP Emma Husar.
Ms Husar described the decision as "disappointing" and a statement appeared to suggest she would not recontest the western Sydney seat as an independent.
"It remains a privilege to continue to represent these amazing people until the next election," Ms Husar said.
"I hope whomever comes after me has fewer mountains to climb."
Ms Beamer was the only nomination in a ballot which had been handed to the party's national executive to conduct.
Ms Husar has spent the past few months fighting accusations she bullied staff and last week she announced plans for defamation proceedings against the media outlet Buzzfeed.
In August, an independent investigation found she subjected staff to "unreasonable communication, demands, practices and disciplinary methods".
However, the investigation did not support staff claims of sexual harassment or lewd behaviour.
Ms Husar said the decision by NSW Labor to withdraw its endorsement of her as the candidate for Lindsay had not been properly explained.
"I wasn't asked or given any opportunity to make any representations. This was all done behind closed doors," she said.
"This brings me deep sadness, as this is a party capable of great things. It's clear now that for whatever reason, I'm not to be a part of it post-May."
Ms Beamer was a state government minister and the member for the seats of Badgerys Creek and Mulgoa from 1995 to 2011.
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