Bill Shorten had previously insisted sacking Sam Dastyari from his leadership positions was punishment enough, but today the embattled senator quit the parliament altogether.
Julie Bishop says Sam Dastyari's resignation did not come soon enough after the embattled Labor senator announced he would quit the Senate.
"At last, Senator Sam Dastyari has acknowledged that he is unfit to be in the Australian parliament," Ms Bishop said.
"Sam Dastyari should resign effective immediately, he shouldn't receive another cent in salary from the Australian people."
Ms Bishop also questioned if Labor's Bennelong candidate Kristina Keneally would angle for the vacancy left by Senator Dastyari.
The senator, whose resignation is pending approval from the Labor party, announced he would be quitting on Tuesday following a string of media reports detailing his ties to Chinese donors.
It follows weeks of pressure from the Turnbull Government and even suggestions from fellow Labor politicians the NSW senator should think “deeply” about his future in the parliament.
"I've decided that the best service I can render to the parliamentary Labor party is to not return to the Senate in 2018," Mr Dastyari told reporters in Sydney.
"I've not reached this decision lightly. But in my deliberations, I've been guided by my Labor values, which tell me that I should leave if my ongoing presence detracts from the pursuit of Labor's mission."
"It is evident to me we are at that point, so I will spare the party any further distraction."
Labor leader Bill Shorten said Sam Dastyari told him he would resign this morning.
"I told him I thought this was the right decision," Mr Shorten said.
"Sam Dastyari is a good, decent and loyal Australian, and an effective parliamentarian, but his judgement has let him down and now he has paid the heaviest price."
Immigration Minister Peter Dutton branded Mr Dastyari a “double agent”, while prime minister Malcolm Turnbull claimed the senator had “quite plainly been acting in the interests of another government or another power”.
Labor frontbencher Jim Chalmers stated that Mr Dastyari “did the wrong thing, now the right thing” by resigning, while Greens leader Richard Di Natale said “this is not about one person, this is about a whole system that is broken”.
The departure creates a so-called casual vacancy in the Upper House and gives Labor the choice of who will replace the outgoing NSW senator.
Already, pundits are speculating the place could be given to Kristina Keneally if she fails to unseat Liberal MP John Alexander at the Bennelong by-election this weekend.
The calls for Senator Dastyari to resign have been growing louder all week, since reports emerged that the senator tried to persuade Labor’s deputy leader Tanya Plibersek not to meet a pro-democracy activist during a visit to Hong Kong in 2015.
Fairfax Media cited three sources who said Senator Dastyari tried to stop Ms Plibersek meeting academic Joseph Cheng Yu-shek, who is a critic of China's influence in Hong Kong. The sources said Ms Plibersek was surprised by her colleague's intervention, Fairfax reports.
The report is the latest in a string of allegations around Senator Dastyari's links with Chinese donors, which recently saw him demoted from leadership positions in the Labor party.
Several weeks ago it was reported the NSW senator advised a Chinese donor on simple counter-surveillance techniques. An audio recording of Senator Dastyari defending China's position on the South China Sea surfaced in the same week.
Finance minister Mathias Cormann said Senator Dastyari "should have left weeks ago".
He said Bill Shorten, who resisted calls to sack Senator Dastyari for weeks, only acted because of the upcoming Bennelong by-election.
"The timing of this is clearly driven by Bill Shorten’s perception of Labor’s political interests," Senator Cormann said.
Labor allies were defending Dastyari yesterday
Some of Senator Dastyari's Labor colleagues were defending his right to remain in the parliament as recently as Monday.
Labor MP Tony Burke said the senator had made a mistake, but insisted Bill Shorten's move to sack him from Senate leadership positions was adequate punishment.
"I think the government's being a bit crazy brave if they want to go down the path that when someone steps out of line, the punishment is immediate resignation from parliament," Mr Burke said on Monday.
Turnbull blasts Dastyari on Q&A
Speaking on the ABC's Q&A program, Prime Minister Malcolm Turnbull took aim at Labor leader Bill Shorten for failing to sack Senator Dastyari.
"Dastyari has quite plainly been acting in the interests of another government or another power," the prime minister said.
"It is extraordinary that Bill Shorten, who wants to be prime minister of Australia, is failing to put Australia's interests first."
The debate over the maverick Labor senator and Chinese influence comes in the leadup to a crucial by-election in the seat of Bennelong this weekend, where the incumbent Liberal MP John Alexander is under pressure from Labor's Kristina Keneally.
Ms Keneally, a former NSW premier, is claiming Chinese voters in the electorate have told her they were offended by the prime minister's words.
“They are really alarmed by the prime minister’s rhetoric,” she said.
“They see it as China-phobia.”
But Mr Turnbull said every country was entitled to defend its interests and dismissed the allegations of China-phobia.
"The suggestion that I, or my Government, or Australia generally, is anti-Chinese is outrageous," he said.
Cabinet minister Christopher Pyne stopped short of Immigration Minister Peter Dutton's description of Senator Dastyari as a "double agent".
But Mr Pyne warned Senator Dastyari could be promoted to cabinet if Bill Shorten becomes prime minister, despite his "inappropriate" behaviour.
"Bill Shorten's reaction to it has not been that of an alternative prime minister," Mr Pyne told ABC radio.
Former federal Labor leader Kim Beazley echoed calls from sitting Labor frontbenchers urging Senator Dastyari to reflect on his position.
"Sam needs to ask himself the question, and he probably is asking himself the question, how do I advance the cause of the Labor Party - by being there or going away?" Mr Beazley told Fairfax Media.
Mr Beazley's intervention comes after ALP health spokesperson Catherine King and her colleague Linda Burney said Senator Dastyari needed to think deeply about his future.
Ms King said his political career was "in essence going nowhere".