Labour leader Phil Goff says Te Atatu MP Chris Carter had no other option than to withdraw his nomination to stand for the party again in the seat.
Mr Carter announced on Thursday he will not seek Labour's re-nomination to contest the Auckland seat, which he has held for more than 10 years.
He faces a disciplinary hearing on Monday over his criticism of Mr Goff and could be suspended or expelled from the party.
Mr Carter was expelled from Labour's caucus earlier for criticising Mr Goff's leadership in an anonymous letter to media in July and remains in Parliament as an independent MP.
The MP says he can not, in good conscience, campaign on behalf of Mr Goff. He says he will stay on as an independent MP until the next election in 2011 and then intends to quit politics, despite being encouraged by his constituents to remain.
Mr Carter says it is obvious that Labour intends to kick him out, so he will step aside.
Mr Goff believes Mr Carter's withdrawal is the only decision he could realistically make, saying Labour has moved on from Mr Carter and will select a new candidate for Te Atatu.
Labour Party president Andrew Little says Mr Carter has left it until the 11th hour to withdraw his name from the nomination process, which closes at 5pm on Friday.
However, Mr Little says he is confident there will be other nominations and he has talked to at least three people who are finalising paperwork for their bids.