Outgoing Andrew Little said the centre-left party needed a fresh team at the top for the September 23 election, after its support plunged to 20-year lows of between 23 and 24 per cent.
“Recent poll results have been disappointing. As leader, I must take responsibility for these results,” he said.
“I do take responsibility and believe that Labour must have an opportunity to perform better under new leadership through to the election.”
Little stepped down immediately, with the Labour caucus set to elect a replacement on Tuesday. He backed his deputy Jacinda Ardern for the role.
The centre-right National Party-led coalition under Prime Minister Bill English is seeking a fourth term in the election and comfortably leads in the polls.