Colin Craig has resigned as the leader of the Conservative Party ahead of a vote by the party's board.
Mr Craig told a media conference a short time ago that his resignation would enable the board to consider the leadership and direction of the party.
"The board have been in extensive communication over the last 24 hours," he said.
"There are some board members that think it is timely to have a leadership discussion. I am fully supportive of the call for a review - the party is now over three years old."
Mr Craig said the balance of outstanding loans he had made to the party would be forgiven so there were no financial liabilities between him and the party.
Last year, Mr Craig loaned more than $315,000 to the Conservatives, on top of the millions he had donated for election campaigns.
Conservative Party board chair Brian Dobbs said the board would discuss the leadership and the party's structure over the coming weeks.
Concern over sauna interview
The board had been due to meet tonight - a week ahead of schedule - amid speculation that Mr Craig's leadership was on the line after some members became upset about a television interview he did in a sauna.
Before this afternoon's announcement, Mr Craig had said he was not worried about a leadership coup.
He said not everyone on the party's board saw eye-to-eye, but he would have expected to have been told if there was a motion to oust him as leader.
"We always have differing views, on differing things and I'll be talking to the chair ahead of the meeting," he said.
Radio New Zealand understands some board members were upset about the sauna interview and said it was the final straw for him as leader since last year's failed election campaign.
Mr Craig said this morning that the sauna interview was not to all members' liking, but he thought it was a bit of fun and in a different format.
"I guess I quite enjoyed the challenge of out-lasting somebody in what was Auckland's hottest sauna for 30 minutes."
Mr Craig would not go into specific details about what board members said to him about the interview.
He said it was appropriate to discuss that inside a board room, not outside it.