Outgoing Andrew Little said the centre-left party needed a fresh team at the top for the September 23 election after its support plunged to 20-year-lows of between 23 and 24 percent.
"Recent poll results have been disappointing. As leader, I must take responsibility for these results," he said.
"I do take responsibility and believe that Labour must have an opportunity to perform better under new leadership through to the election."
Little stepped down immediately, with the Labour caucus set to elect a replacement later in the day. He backed his deputy Jacinda Ardern for the role.