NSW Health Minister Jillian Skinner has quit politics rather than be stripped of her prized portfolio, causing an additional headache for the new Berejiklian government.

A by-election to replace the veteran MP in the Sydney seat of North Shore will be another electoral test for Premier Gladys Berejiklian, who was already facing a by-election in nearby Manly following the shock resignation of her predecessor Mike Baird.

Before a major cabinet reshuffle next week, Ms Berejiklian had asked Ms Skinner to step aside as health minister during a difficult “face-to-face” conversation.

“I made it clear to her she would be welcome on the team but obviously we had a difference of opinion as to what that job should be,” the premier said on Friday shortly after Ms Skinner announced her decision to resign.

Ms Berejiklian said she “had to make that call”.

“I have a responsibility to make sure I put together a team that I believe is going to carry us into the future,” the Liberal leader said, adding the new cabinet would be announced in coming days.

Ms Skinner, 72, is expected to formally tender her resignation early next week.

The premier conceded she was worried about the looming by-elections.

“It’s not something a leader wants to face and it will be a tough fight,” Ms Berejiklian said.

The new premier concedes the looming by-elections are not ideal for her government.

Ms Skinner on Friday afternoon was asked why she’d refused to take on another role.

“I’m not answering any questions,” she said as she left her ministerial office, instead referring reporters to a written statement issued earlier in the day.

In that statement she said: “I am naturally sad to be leaving the portfolio I love … however a new chapter beckons and I am looking forward to the challenges of life outside politics.”

The embattled MP weathered a series of scandals in 2016 including the accidental gassing of two newborn babies at Bankstown-Lidcombe Hospital, which left one dead and the other with severe disabilities.

She also faced fierce criticism for her handling of the chemotherapy underdosing crisis engulfing hospitals across Sydney and rural NSW.

Ms Skinner, who’s been in parliament since 1994, said in her statement it had been honour serving as health minister.

“During the last six years, I have led significant reforms within the NSW health system, from culture and management to hospital performance and infrastructure, finances and governance, innovation and medical research,” she said.

NSW health system under Jillian Skinner #nswpol pic.twitter.com/fdqbcegx2s

— Walt Secord (@WaltSecordMLC) August 26, 2015

Opposition health spokesman Walt Secord acknowledged Ms Skinner’s “hard work and commitment to HIV/Hepatitis C prevention and her efforts on organ donation”.

But he said she had left the NSW health and hospital system in a “sorry state”.

Mr Secord urged Ms Berejiklian and her new health minister to immediately drop privatisation plans for four state hospitals, set up a special commission of inquiry into the chemotherapy scandal, upgrade Sydney’s Nepean Hospital and address long elective surgery waiting lists.

– with Rashida Yosufzai, AAP