Caroline Kennedy has withdrawn her bid for the United States Senate seat vacated by Hillary Clinton.
Ms Kennedy, the daughter of President John F Kennedy, cited personal reasons for the decision.
She launched an unusual public campaign to replace Mrs Clinton, who is now US Secretary of State.
The New York Times reported Ms Kennedy advised Governor Paterson of her decision on Wednesday.
The newspaper reported that her decision to withdraw was prompted by concerns about the health of her uncle, Senator Edwad Kennedy, who was hospitalised after a seizure during an inaugural lunch for President Barack Obama on Tuesday.
Senator Kennedy was diagnosed with a brain tumour last year.
Ms Kennedy's withdrawal would leave New York Attorney-General Andrew Cuomo as a front-runner for the New York seat.Mr Cuomo is a former cabinet secretary under President Bill Clinton and the son of former New York governor Mario Cuomo.
The paper said Mr Paterson is expected to announce on Saturday whom he has selected for the Senate seat.
Whoever is selected must run for the two years left in Mrs Clinton's term in 2010 before pursuing their own six-year tenure in 2012.