Luke Foley has sensationally resigned as NSW Opposition Leader and threatened to sue the ABC for publishing an allegation he inappropriately touched a journalist.

Mr Foley said he was not guilty of putting his hand down Ashleigh Raper’s dress and touching her buttocks at a Christmas party in 2016.

“The allegations against me today made public by the ABC are false,” Mr Foley said.

“I can’t fight to clear my name and fight an election at the same time. It’s just not possible to do both.

“Therefore I’m resigning the leadership of the Labor Party effective today.

“This will enable a new leader to give his or her full attention to the task of defeating the Liberal-National government.”

He will remain on the backbench as local member for Auburn.

Mr Foley said he had retained solicitors and senior counsel to immediately begin defamation proceedings in the Federal Court.

ABC news director Gaven Morris stood by the ABC’s earlier statement and said Ms Raper was a “strong and honest person”.

Mr Foley’s position as leader was viewed as untenable as soon as the allegation was detailed in a statement.

Deputy Leader Michael Daley is considered Mr Foley’s most likely replacement as Labor leader.

Labor MPs were distancing themselves from Mr Foley on Thursday.

Jenny Aitchison, Labor spokesperson for the prevention of domestic violence and sexual assault, said she was “deeply saddened” by the situation Ms Raper had been put in.

“She is incredibly brave and I thank her for coming forward to tell her story,” Ms Aitchison said in a statement on Thursday night.

“It is entirely appropriate for Luke Foley to resign as Leader of the Opposition.”

Blue Mountains MP Trish Doyle told ABC radio that resigning was the respectful response, but that she was surprised at his defamation threat.

“I am really surprised, yes,” Ms Doyle on Thursday night.

“I’ll be thinking about my next step, obviously as a lot of people are, in the coming days.”

She said it was problematic that women felt afraid to speak up because of potential consequences.

Ms Doyle had earlier called for his resignation, and threatened to call a spill motion if he did not.

“I am concerned that this issue has drawn out and caused such distress and anguish for the journalist at the centre of it.

“Bad behaviour is bad behaviour, whoever does it.”

A Labor MP told The New Daily there was a feeling of “anger and disgust” at Mr Foley’s response within the party.

Another party source said MPs were “shell-shocked”.

A Labor MP told AAP his response on Thursday was “unbelievable”.

“The two other MPs I’ve spoken to said that is atrocious. I think he is just refusing to go in a dignified way.”

Journalist’s claims

Ms Raper published a statement on Thursday, claiming Mr Foley called her on Sunday to apologise and that he planned to resign as opposition leader.

“He told me that he wanted to talk to me about that night on many occasions over the past two years because, while he was drunk and couldn’t remember all the details of the night, he knew he did something to offend me,” Ms Raper said in her statement.

“He apologised again and told me, ‘I’m not a philanderer, I’m not a groper, I’m just a drunk idiot’.”

He called again on Tuesday to say he would not be resigning on legal advice, she said.

She alleged Mr Foley touched her at a Martin Place bar during a press gallery Christmas function in 2016.

“He put his hand through a gap in the back of my dress and inside my underpants,” she alleged.

He rested his hand on my buttocks. I completely froze.”

Sean Nicholls, an ABC journalist who was then state political editor for The Sydney Morning Herald, witnessed the alleged incident.

Ms Raper said she was forced into speaking out after Corrections Minister David Elliott made a reference to alleged harassment in Parliament last month.

She said she did not want to come forward with the complaint.

“This occurred without my involvement or consent.

“It is clear to me that a woman who is the subject of such behaviour is often the person who suffers once a complaint is made.”

In a statement, the ABC said management was made aware of the claim after media inquiries in April.

The ABC said it offered her support and respected her wishes not to make a formal complaint.