Prime Minister Scott Morrison wanted Julie Bishop to stay on as foreign minister, but has accepted her decision to step aside.
Ms Bishop issued a statement on Sunday afternoon announcing her decision following Friday’s change of prime minister.
But she left open the question about how long she would stay in parliament.
“Today I advised the prime minister that I will be resigning from my cabinet position as Minister for Foreign Affairs,” she said.
“I will remain on the backbench as a strong voice for Western Australia.
“I have been pre-selected by the Liberal Party for the seat of Curtin and I have made no decision regarding the next election.”
Mr Morrison announced defence minister Marise Payne will take over foreign affairs on the recommendation of Ms Bishop.
“I would have very much welcomed her continuing role in the ministry, but totally understand and respect the decision that she has made,” Mr Morrison said.
Ms Bishop, 62, was deputy Liberal leader for more than a decade but she only received 11 votes in last Friday’s leadership ballot after Malcolm Turnbull called a spill.
Mr Turnbull on Sunday described her as Australia’s finest foreign minister and thanked her for her loyalty and friendship.
“She has been and remains an inspiring role model for women here and around the world,” he tweeted.
Ms Bishop’s Labor counterpart Penny Wong paid tribute to her for her trailblazing role as the first Australian woman to be foreign affairs minister.
“For five years she has dedicated her life to our nation with a tireless work ethic and exhausting travel schedule,” Senator Wong said.
“While Labor has at times been critical of the foreign policy directions under prime ministers Abbott and Turnbull, Ms Bishop’s commitment to standing up for Australia both here and abroad has never been in question.”
Western Australian Labor Premier Mark McGowan said it was disappointing Ms Bishop’s WA colleagues did not back her in the leadership tilt.
“They were disloyal to Western Australia’s interests and the fact that people like Christian Porter were prepared to support (Peter) Dutton indicates he wasn’t acting in West Australia’s interests,” Mr McGowan said.
“They should have supported a Western Australian candidate, it’s not as though she didn’t have enough experience.”
Former prime minister and foreign minister Kevin Rudd tweeted Ms Bishop had been a highly effective Australian foreign minister.
” … she has earned, absolutely, the respect of foreign ministers around the world,” he said.
British High Commissioner to Australia Menna Rawlings she was sad to hear of Ms Bishop’s resignation.
“She has been a gutsy, dynamic, representative of Australia. And a fantastic friend of GB (Great Britain),” she tweeted.
Cabinet minister Simon Birmingham earlier on Sunday said Ms Bishop was “the most significant woman in the history of the Liberal Party” and deserved to make a decision about her future without external pressure.
Ms Bishop, who is renowned for her fitness and energy, announced her resignation after finishing the City to Surf fun in Perth with a personal best time.