Cabinet minister Kelly O'Dwyer says she has "no doubt" that a female will be pre-selected to run as the Liberal candidate in the seat of Higgins.
Australia's Industrial Relations Minister Kelly O'Dwyer is quitting politics to spend more time with her family and try for a third child.
Alongside Prime Minister Scott Morrison in a park in her Melbourne electorate of Higgins on Saturday, Ms O'Dwyer said she would not recontest the seat at the next election.
"I cannot commit to another three years and continue to deliver the quality of service that my country, my party and my community are entitled to expect," she told reporters.
Over the Christmas break she took time to reflect on her growing children Olivia and Edward, who will reach primary school age during the next parliament.
"I no longer want to consistently miss out on seeing my children when they wake up in the morning or go to bed at night and I want to know that when I am around, my time is not constantly disrupted," she said.
"There is another very personal reason. Like so many other families, our journey to parenthood has not been straightforward," adding she and her husband want to give themselves the best chance to have a third child.
"We need to be very realistic. I turn 42 ... this year and everything has to go right."
Ms O'Dwyer said her choice did not mean men or women had to choose between family and public service but this was the choice she had made for herself.
"There is no one I know who has worked harder or achieved more than Kelly O'Dwyer," Mr Morrison said.
"I support her choice. I support all women's choices. I want women to have more choices and all the independence that comes with that."
Former prime minister Malcolm Turnbull praised the "true liberal" for her commitment to fairness, opportunity and never losing her passion for economic reform.
"You have demonstrated women can do anything - including first woman to hold a treasury portfolio in cabinet and certainly the first to do so with such young children," he tweeted on Saturday night.
"The parliament's loss is you, your family's (and your sanity's!) gain."
Ms O'Dwyer was first elected to the seat in a by-election to replace former treasurer Peter Costello in 2009.
While Labor Senator Kristina Keneally tweeted she may not have always agreed with Ms O'Dwyer, she'd been was a "friendly person" who welcomed her into the upper house last year.
"It's sad her departure will leave the Liberal Party with fewer women," she said.
Both Ms O'Dwyer and Mr Morrison suggested a woman could be pre-selected for the job.
"This seat will be represented incredibly well by one of the very talented people who come forward and I have no doubt that it will be a woman," Ms O'Dwyer said.
A former lawyer, Ms O'Dwyer holds Higgins by eight per cent.
Her resignation comes on the back of a battering for the Liberals in the Victorian state election, including in the party's heartland.
The next federal election is expected for May this year.