The NSW Labor opposition is without a leader after Jodi McKay announced her resignation in a tearful press conference.

The party may face a bruising and lengthy leadership election if more than one candidate puts up their hand to replace Ms McKay.

The party is divided, with Ms McKay’s allies blaming her fall on bullying, and the former opposition leader alleging destabilisation from within.

Ms McKay, who has been opposition leader since mid-2019, on Friday said she was quitting to unite the party despite retaining the support of the majority of her colleagues.

“If a ballot was held today I can tell you I would win,” she said at an emotional media briefing.

“But it is clear that although I was elected in a democratic ballot there are those within our party that have never accepted the outcome of that process.

“There has to be a future where there is no destabilising of the party’s leader from within.”

A supporter of Ms McKay said the leader had endured constant backgrounding and white-anting.

“The question is now whether you give in to the bullies,” they said.

Ms McKay’s leadership rival Chris Minns and ex-opposition leader Michael Daley are considering running for the leadership, with the former considered the favourite.

Ms McKay had repeatedly pledged this week to stay in the top job and help NSW Labor rebuild after a disappointing performance in last weekend’s byelection in the state seat of Upper Hunter. Labor’s primary vote slipped to 21 per cent in the poll.

A bust-up over a “dirt file” about Mr Minns, allegedly circulated out of deputy Labor leader Yasmin Catley’s office, placed additional pressure on Ms McKay’s leadership.

Ms McKay insisted neither she nor Ms Catley knew anything about the “dirt file” on Mr Minns. The staffer who distributed the file has been removed.

Shadow treasurer Walt Secord blamed the dirt file for his resignation on Tuesday. Mr Minns’ resignation came soon after as he declared his position “untenable”.

Ms Catley resigned from the frontbench and as Labor deputy leader on Friday, saying the past few weeks had been “incredibly difficult”.

Firing her staffer was one of the most difficult moments of her working life, she said.

“I deeply regret the events of the last few days and their impact on my colleagues. Personal attacks on colleagues are not the Labor way,” Ms Catley said in a statement.

Ms Catley said the party needed to heal its divisions and that she had attempted to contact Mr Minns to convey her regret.

Mr Minns was Ms McKay’s rival in the 2019 vote in which she took the Labor reins.

She prevailed in a leadership election contest involving the party’s rank-and-file, beating Mr Minns 29 to 21 in caucus and claiming 63 per cent of Labor members’ votes.

That process was introduced by Kevin Rudd in 2013 to address the toppling of leaders that characterised both the federal and state parties in the late 2000s and early 2010s.

Mr Minns never publicly challenged Ms McKay for the leadership, having said on Wednesday that he needed to speak with his colleagues.

Ms McKay on Friday called on the party to accept the result of any ballot resulting from her resignation, adding that she would remain on the back bench as Strathfield MP.

“We must all support the outcome, we must all support the new leader and we have to work to win government in 2023,” she said.

If Mr Minns prevails, he will be the fourth NSW Labor in under three years, following Luke Foley, Mr Daley and Ms McKay.

Health spokesman Ryan Park thanked Ms McKay and Ms Catley, saying on Friday they “worked incredibly hard” for the party.

NSW Labor’s head office has been contacted for comment.

-with AAP