"Jeremy Paxman has decided to step down as the presenter of Newsnight, a position he has held with great distinction for 25 years," a BBC statement yesterday said.
The presenter told BBC Director General Tony Hall of his decision last summer, but agreed to stay on to help implement sweeping changes brought about by its disastrous handling of a child sex abuse story.
"The BBC is immensely grateful for this gesture, which is entirely in keeping with his outstanding contribution to both Newsnight and, over four decades, the BBC itself," said the statement.
"I have known Jeremy and relished working with him, since the day I joined the BBC in 1973, and I am therefore better placed than most to know what a remarkable job he has done at Newsnight," he added.
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He will continue to host BBC Two's highbrow quiz University Challenge.
Many establishment figures have been cut down to size by Paxman's withering sarcasm and relentless grillings during his quarter-century tenure.
In 1997 he famously asked then home secretary Michael Howard the same question 12 times without receiving the "yes" or "no" answer he demanded.
"You can't even tell me when you were told what the change of policy was," he told the visibly shaken Smith.
"You were told some time today clearly, was it before lunch or after lunch?" he asked.
BBC boss Hall celebrated Paxman's "rare and dazzling talent," saying he had "a unique ability to create moments of real discomfort for politicians and memorable delight for audiences."
A recent interview with Russell Brand, in which the British actor and comedian called for a revolution, soon went viral and has gathered over 10 million views on YouTube.